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Annual Reports
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ETFMG Prime Junior Silver Miners ETF
SILJ
ETFMG Prime 2x Daily Junior Silver
Miners ETF
SILX
Annual Report
September 30, 2022
The funds are series of ETF Managers Trust.
ETFMG™ ETFs
TABLE OF CONTENTS
September 30, 2022
ETFMG™ ETFs
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these ETFs. The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
Market Overview
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and, in many cases, unprecedented volatility and severe losses due to the global pandemic caused by COVID-19. Some sectors of the economy and individual issuers have experienced particularly large losses because of these disruptions. In response to these disruptions, the U.S. government and the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, contributing to inflationary pressure and expectations for inflation. Further, Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict have increased volatility and uncertainty in the financial markets and adversely affect regional and global economies. The full extent and duration of these conditions and the totality of repercussions are impossible to predict but could continue to result in significant market disruptions and may continue to negatively affect global supply chains, inflation and global growth. These and related events have impacted the ETFs’ performance, among other factors, and the value of an investment in the ETFs. We encourage you to talk with your financial advisor and visit etfmg.com for further insight about investing in today’s markets.
Performance Overview
During the fiscal-year ended September 30, 2022, the S&P 500 Information Technology Sector Index, a broad measure of US listed technology companies, returned -20.0%. During the same period, the S&P Global 1200 Information Technology Sector Index, a broad measure of global technology companies, returned -24.5%. Below is a performance overview for each Fund for the same 1 year period.
ETFMG Prime Junior Silver ETF (SILJ)
The ETFMG Prime Junior Silver ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Junior Silver Miners & Explorers Index (the “Index”).
Over the period, the total return for the Fund was -22.63%, while the total return for the Index was - 22.62%. The best performers in the Fund on the basis of contribution to return were Turquoise Hill Resources Ltd, Yamana Gold Inc, Capstone Copper Corp and Ssr Mining Inc and Aya Gold & Silver Inc, while the worst performers in the Fund on the basis of contribution to return were First Majestic Silver Corp, Pan American Silver Corp, Gatos Silver Inc, Hecla Mining Co, Gogold Resources Inc.
During the reporting period, the Fund saw an average approximate allocation of 97.97% to Materials. The Fund was, exposed predominately to Canada 65.63%, followed by Mongolia 13.23% and the United States 8.44%.
ETFMG Prime 2x Daily Junior Silver Miners ETF (SILX); and
ETFMG Prime 2x Daily Inverse Junior Silver Miners ETF (SINV)
Operational Review
The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022 with respect to SILX and October 1, 2021 through July 15, 2022 the last day of operations, with respect to SINV.
The ETFs are leveraged and seek daily investment results, before fees and expenses, of 200% or - 200% of the performance of the Index. The ETFs, as stated above, seek daily investment results. They do not seek to track a multiple of the Index for periods of longer than one day and the performance of the ETFs over longer periods may not correlate to the Index performance. The ETFs should not be held by investors for long periods and should be used as short-term trading vehicles. These products are not suitable for all investors and should be utilized only by sophisticated investors who understand the risks associated with the use of leverage, sustain the potential, significant losses/consequences of seeking daily leveraged investment results and intend to actively monitor and manage their investments.
SILX attempts to provide investment results that correlate to 200% of the return of the Index, meaning SILX attempts to move in the same direction as the Index. SINV attempts to provide investment results that correlate to -200% of the return of a benchmark, meaning that SINV attempts to move in the opposite, or inverse, direction of the Index.
In seeking to achieve each ETF’s daily investment results, ETF Managers Group LLC (the “Adviser”) relies upon quantitative analysis to generate orders resulting in repositioning each ETF’s investments in accordance with its daily investment objective. Using this approach, the Adviser determines the type, quantity and mix of investment positions that it believes in combination should produce daily returns consistent with the ETF’s objective. As a consequence, if the ETF is performing as designed, the return of the Index will dictate the return for that ETF. Each ETF pursues its investment objective regardless of market conditions and does not take defensive positions. Each ETF has a clearly articulated goal which requires the ETF to seek economic exposure significantly in excess of its net assets. To meet its objectives, each ETF invests in some combination of financial instruments, including derivatives. Each ETF invests significantly in derivatives, including swap agreements. The Adviser uses these types of investments to produce economically “leveraged” investment results. Leveraging allows the Adviser to generate a greater positive or negative return than what would be generated on the invested capital without leverage, thus changing small market movements into larger changes in the value of the investments of the ETF.
The ETFs may use certain investment techniques, including investments in derivatives, which may be considered aggressive. Investments in derivatives in general are subject to market risks that may cause their prices to fluctuate dramatically over time. Additionally, use of such instruments may increase the volatility of the ETFs. The use of derivatives may expose the ETFs to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives, such as counterparty risk. The use of derivatives may result in larger losses or smaller gains than otherwise would be the case.
Because each ETF seeks daily investment results of the Index, a comparison of the return of the ETF to the Index does not provide an indication of whether the ETF has met its investment objective. To determine if an ETF has met its daily investment goals, the Adviser performs quantitative analysis seeking to determine the expected performance of each ETF as compared to Index. The quantitative analysis includes predictive models as well as stress-testing and back-testing. Factors Affecting Performance of the ETFs:
Leverage – Each ETF seeks daily investment results (before fees and expenses) of 200% or -200% of the performance of the Index. The use of leverage magnifies an ETF’s gains or losses and increases the investment’s risk and volatility.
Index Performance – The daily performance of Index, and the factors and market conditions implicitly affecting the Index, are the primary factors driving ETF performance. Given the daily goals, the daily Index returns are most important. The market conditions that affected the Index during the past year are described in the Performance Overview section.
Volatility and Compounding – The goal of the ETFs is to provide the specified multiple of the daily return of the Index. Over periods longer than a single day, an ETF should not be expected to provide the multiple of the return of the underlying index. Due to the effects of compounding, a universal mathematical concept that applies to all investments, returns of the ETFs over longer periods are greater or less than the ETF’s daily stated goal. Periods of high volatility that lack a clear trend hurt an ETF’s performance while trending, low volatility markets enhance an ETF’s performance.
Cost of Financing – In order to attain leveraged or inverse leveraged exposure, an ETF receives [LIBOR] plus or minus a spread as applied to the borrowed portion of the ETF’s exposure. The spread varies by ETF and counterparty and is a function of market demand, hedging costs, access to balance sheet, borrow volatility, current counterparty exposure and administrative costs associated with the swap counterparty. An increase in interest rates which effects the cost of financing will further impact an ETF’s performance and ability to track the Index.
Fees, Expenses, and Transaction Costs – Fees and expenses are listed in each ETF’s prospectus and may be higher than many traditional index funds’ fees, which cause a greater negative impact on ETF performance. Transactions costs are not included in the expense ratio of the ETFs. Transaction costs can be higher due to the ETF’s use of derivatives, shorting securities, frequent creation and redemption activity, or trading securities that are comparatively less liquid.
Performance Review
The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022 with respect to SILX and October 1, 2021 through July 15, 2022 the last day of operations, with respect to SINV.
ETFMG Prime 2x Daily Junior Silver Miners ETF (SILX)
SILX seeks to provide daily investment results, before fees and expenses, that correspond to two times (2x) the return of the Index for a single day, not for any other period. Over the reporting period, the Index had a total return of -22.62% and a volatility of 44.4%. Given the daily investment objectives of SILX and the path dependency of returns for longer periods, the return of the Index for the reporting period alone should not generate expectations of SILX performance for the same period. SILX returned -54.16% for the reporting period and a volatility of 88.6%. For the reporting period SILX had an average daily volume of 24,604 shares and an average daily statistical correlation of 99.6% to the return of the Index.
ETFMG Prime 2x Daily Inverse Junior Silver Miners ETF (SINV)
SINV seeks to provide investment results that, before fees and expenses, correspond to two times the inverse (-2x) (or opposite) of the return of the Index for a single day, not for any other period. Over the reporting period the Index had a total return of -26.13% and a volatility of 44.1%. Given the daily investment objectives of SINV and the path dependency of returns for longer periods, the return of the Index for the reporting period alone should not generate expectations of SINV performance for the same period. SINV returned -6.14% and a volatility of 87.6%. For the reporting period SINV had an average daily volume of 4,670 shares and an average daily statistical correlation of over -97.9% to the return of the Index.
Swap Agreements:
During the reporting period, the ETFs invested in swap agreements in order to gain the desired exposure to the Index. These derivatives generally tracked the performance of SILJ and the ETFs were generally negatively impacted from financing rates associated with their use. The ETFs entered into swap agreements with counterparties that the Adviser determined to be major, global financial institutions.
If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the ETF will likely decline. The ETFs have sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the ETFs, marked to market daily, in an amount approximately equal to the amount the counterparty owed the ETF, subject to certain minimum thresholds objective.
You can find further details about SILJ, SINV and SILX by visiting www.etfmg.com, or by calling 1- 844-ETF-MGRS (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
ETFMG Prime Junior Silver Miners ETF
Growth of $10,000 (Unaudited)
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
5 Year Return |
Since Inception (11/28/12) |
Value of $10,000 (9/30/2022) |
||||||||||||
ETFMG Prime Junior Silver Miners ETF (NAV) | -22.63 | % | -4.16 | % | -6.93 | % | $ | 4,934 | ||||||||
ETFMG Prime Junior Silver Miners ETF (Market) | -22.50 | % | -4.20 | % | -6.94 | % | $ | 4,929 | ||||||||
S&P 500 Index | -15.47 | % | 9.24 | % | 12.10 | % | $ | 30,776 | ||||||||
Prime Junior Silver Miners & Explorers Index* | -22.62 | % | -4.00 | % | -6.15 | % | $ | 5,354 |
* The Fund’s benchmark before 8/1/17 was the ISE Junior Silver (Small Cap Miners/Explorers) Index. On 8/1/17, the Fund’s benchmark became the Prime Junior Silver Miners & Explorers Index.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 28, 2012, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The index returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Prime Junior Silver Miners ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)* | ||||
Security | % of Total Investments | |||
1 | Turquoise Hill Resources, Ltd. | 12.85% | ||
2 | First Majestic Silver Corp. | 12.55% | ||
3 | Yamana Gold, Inc. | 9.92% | ||
4 | Pan American Silver Corp. | 5.90% | ||
5 | SSR Mining, Inc. | 5.47% | ||
6 | SilverCrest Metals, Inc. | 4.64% | ||
7 | Hecla Mining Co. | 4.49% | ||
8 | MAG Silver Corp. | 3.63% | ||
9 | Cia de Minas Buenaventura SAA - ADR | 3.49% | ||
10 | Endeavour Silver Corp. | 3.27% |
Top Ten Holdings = 66.21% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG Prime 2x Daily Junior Silver Miners ETF
Growth of $10,000 (Unaudited)
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
Since Inception (6/15/2021) |
Value of $10,000 (9/30/2022) |
|||||||||
ETFMG Prime 2x Daily Junior Silver Miners ETF (NAV) | -54.16 | % | -69.98 | % | $ | 2,110 | ||||||
ETFMG Prime 2x Daily Junior Silver Miners ETF (Market) | -53.98 | % | -69.76 | % | $ | 2,130 | ||||||
S&P 500 Index | -15.47 | % | -10.95 | % | $ | 8,607 | ||||||
Prime Junior Silver Miners & Explorers Index | -22.62 | % | -38.11 | % | $ | 5,377 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on June 15, 2021, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG™ ETFs
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
SILJ
The ETFMG Prime Junior Silver Miners ETF (the “Fund” or the “Junior Silver ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Junior Silver Miners & Explorers Index (the “Index”).
Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. These risks are greater for investments in emerging markets. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual issuer volatility than a diversified fund. Funds that are less diversified across countries or geographic regions are generally riskier than more geographically diversified funds and risks associated with such countries or geographic regions may negatively affect a Fund. Investments in small capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The ETFMG Prime Junior Silver Miners ETF is subject to risks associated with the worldwide price of silver and the costs of extraction and production. Worldwide silver prices may fluctuate substantially over short periods of time, so the Fund’s share price may be more volatile than other types of economic conditions, tax treatment, government regulation and intervention, and world events in the regions in which the company’s operation. Several foreign countries have begun a process of privatizing certain entities and industries. Privatized entities may lose money or be renationalized. The Fund invests in some economies that are heavily dependent upon trading with key partners. Any reduction in this trading may cause an adverse impact on the economy in which the Fund invests. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Junior Silver Miners & Explorers Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Prime Junior Silver Miners & Explorers Index. IOPV or indicative optimized portfolio value is an estimated intraday fair value of one share of an ETF determined by the last trade price of the fund’s underlying securities.
The Prime Junior Silver Miners & Explorers Index is designed to provide a benchmark for investors interested in tracking public, small-cap companies that are active in silver mining exploration and production industry. The stocks are screened for liquidity and weighted according to modified free-float market capitalization. The Index generally is comprised of 50 securities. An investment cannot be made directly in an index.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETFMG™ ETFs
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG Financial LLC is not affiliated with Prime Indexes.
SILX
Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. These risks are greater for investments in emerging markets. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual issuer volatility than a diversified fund. Funds that are less diversified across countries or geographic regions are generally riskier than more geographically diversified funds and risks associated with such countries or geographic regions may negatively affect a Fund. Investments in small capitalization companies tend to have limited liquidity and greater price volatility than large- capitalization companies. The ETFMG Prime Junior Silver Miners ETF is subject to risks associated with the worldwide price of silver and the costs of extraction and production. Worldwide silver prices may fluctuate substantially over short periods of time, so the Fund’s share price may be more volatile. Several foreign countries have begun a process of privatizing certain entities and industries. Privatized entities may lose money or be renationalized. The Fund invests in some economies that are heavily dependent upon trading with key partners. Any reduction in this trading may cause an adverse impact on the economy in which the Fund invests. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Junior Silver Miners & Explorers Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Prime Junior Silver Miners & Explorers Index. IOPV or indicative optimized portfolio value is an estimated intraday fair value of one share of an ETF determined by the last trade price of the fund’s underlying securities.
Investing in an ETFMG 2x Daily Inverse Leveraged ETF may be more volatile than investing in broadly diversified funds. The use of leverage by an ETF increases the risk to the ETF. The ETFMG 2x Daily Leveraged ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leveraged, or daily inverse leveraged, investment results and intend to actively monitor and manage their investment.
The use of derivatives such as swaps are subject to additional risks that may cause prices to fluctuate over time and include the effects of compounding, market volatility, leverage risk, aggressive investment techniques risk, counterparty risk, and intra-day investment risk. Please see the summary and full prospectuses for a more complete description of these and other risks of investing in the Fund.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETFMG™ ETFs
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
The Fund is a recently organized, diversified management investment company with limited operating history. ETF Managers Group LLC is the investment advisor to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.
ETFMG™ ETFs
As of September 30, 2022 (Unaudited)
ETFMG Prime Junior Silver Miners ETF |
ETFMG Prime 2x Daily Junior Silver Miners ETF |
|||||||
As a percent of Net Assets: | ||||||||
Australia | 0.4 | % | — | % | ||||
Canada | 81.3 | — | ||||||
Luxembourg | 0.6 | — | ||||||
Peru | 3.5 | — | ||||||
South Africa | 2.9 | — | ||||||
United Kingdom | 0.7 | — | ||||||
United States | 8.7 | — | ||||||
Virgin Islands | 0.0 | * | — | |||||
Total Return Swap | — | 75.7 | ||||||
Short-Term and other Net Assets (Liabilities) | 1.9 | 24.3 | ||||||
100.0 | % | 100.0 | % |
* Amount is less than 0.05.
ETFMG™ ETFs
ETFMG Prime Junior Silver Miners ETF
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 98.1% | ||||||||
Australia - 0.4% | ||||||||
Metals & Mining - 0.4% (d) | ||||||||
Kingsgate Consolidated, Ltd. (a) | 2,511,920 | $ | 2,522,605 | |||||
Canada - 81.3% | ||||||||
Metals & Mining - 81.3% (d) | ||||||||
AbraSilver Resource Corp. (a) | 17,129,762 | 5,208,311 | ||||||
Americas Gold & Silver Corp. (a)(e) | 2,772,472 | 1,164,103 | ||||||
Andean Precious Metals Corp. (a)(e) | 2,375,830 | 1,324,349 | ||||||
Aris Mining Corp. | 1,125,760 | 3,023,542 | ||||||
Ascot Resources, Ltd. (a) | 5,022,970 | 1,418,148 | ||||||
Aya Gold & Silver, Inc. (a) | 1,579,123 | 9,156,821 | ||||||
Bear Creek Mining Corp. (a)(e) | 1,869,700 | 785,048 | ||||||
Benchmark Metals, Inc. (a) | 2,011,832 | 568,006 | ||||||
Canada Silver Cobalt Works, Inc. (a) | 2,081,614 | 135,625 | ||||||
Capstone Copper Corp. (a) | 7,952,432 | 18,767,820 | ||||||
Coppernico Metals, Inc. (a)(b) | 585,867 | 118,844 | ||||||
Discovery Silver Corp. NPV (a) | 5,262,407 | 3,581,035 | ||||||
Dolly Varden Silver Corp. (a)(e) | 3,469,594 | 1,092,607 | ||||||
Dundee Precious Metals, Inc. | 2,192,360 | 9,744,880 | ||||||
Eldorado Gold Corp. (a) | 2,129,490 | 12,872,365 | ||||||
Endeavour Silver Corp. (a) | 6,555,908 | 19,798,842 | ||||||
Excellon Resources, Inc. (a)(e) | 529,330 | 182,019 | ||||||
First Majestic Silver Corp. | 9,986,328 | 76,095,819 | ||||||
Fortuna Silver Mines, Inc. (a) | 3,360,545 | 8,417,480 | ||||||
GoGold Resources, Inc. (a) | 4,444,880 | 5,084,092 | ||||||
Hudbay Minerals, Inc. | 3,019,618 | 12,154,107 | ||||||
Kootenay Resources, Inc. (a)(b) | 224,973 | 1,628 | ||||||
Kootenay Silver, Inc. (a)(e) | 5,414,988 | 450,808 | ||||||
Liberty Gold Corp. (a) | 3,654,056 | 1,071,338 | ||||||
MAG Silver Corp. (a) | 1,756,998 | 21,991,889 | ||||||
Mandalay Resources Corp. (a)(e) | 460,196 | 583,012 | ||||||
Metalla Royalty & Streaming, Ltd. (a) | 225,038 | 866,690 | ||||||
Minaurum Gold, Inc. (a)(e) | 1,836,546 | 279,201 | ||||||
Mirasol Resources, Ltd. (a)(e) | 270,886 | 80,402 | ||||||
New Gold, Inc. (a) | 7,866,979 | 7,005,020 | ||||||
New Pacific Metals Corp. (a) | 785,667 | 1,643,738 | ||||||
Orla Mining, Ltd. (a) | 2,980,279 | 9,730,378 | ||||||
Pan American Silver Corp. | 2,248,694 | 35,748,594 | ||||||
Sabina Gold & Silver Corp. (a) | 6,323,505 | 4,989,771 | ||||||
Seabridge Gold, Inc. (a) | 935,882 | 11,131,532 | ||||||
Sierra Metals, Inc. | 1,886,191 | 955,828 | ||||||
Silvercorp Metals, Inc. | 2,662,761 | 6,226,313 | ||||||
SilverCrest Metals, Inc. (a) | 5,065,100 | 28,124,166 | ||||||
SSR Mining, Inc. | 2,256,044 | 33,170,633 | ||||||
Trevali Mining Corp. (a)(e) | 970,159 | 14,047 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Junior Silver Miners ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Turquoise Hill Resources, Ltd. (a) | 2,630,405 | $ | 77,882,915 | |||||
Yamana Gold, Inc. | 13,281,499 | 60,165,190 | ||||||
Total Metals & Mining | 492,806,956 | |||||||
Luxembourg - 0.6% | ||||||||
Metals & Mining - 0.6% (d) | ||||||||
Nexa Resources SA | 662,666 | 3,419,357 | ||||||
Peru - 3.5% | ||||||||
Metals & Mining - 3.5% (d) | ||||||||
Cia de Minas Buenaventura SAA - ADR | 3,143,173 | 21,153,554 | ||||||
South Africa - 2.9% | ||||||||
Metals & Mining - 2.9% (d) | ||||||||
Harmony Gold Mining Co., Ltd. - ADR | 7,318,159 | 17,783,126 | ||||||
United Kingdom - 0.7% | ||||||||
Metals & Mining - 0.7% (d) | ||||||||
Hochschild Mining PLC | 5,953,092 | 3,921,668 | ||||||
United States - 8.7% | ||||||||
Metals & Mining - 8.7% (d) | ||||||||
Coeur Mining, Inc. (a) | 3,231,042 | 11,050,164 | ||||||
Gatos Silver, Inc. (a) | 2,385,927 | 6,394,284 | ||||||
Gold Resource Corp. | 1,016,625 | 1,677,431 | ||||||
Golden Minerals Co. (a)(e) | 2,513,229 | 648,413 | ||||||
Hecla Mining Co. | 6,910,650 | 27,227,963 | ||||||
Ivanhoe Electric, Inc. (a) | 464,777 | 3,834,410 | ||||||
McEwen Mining, Inc. (a) | 545,591 | 1,778,627 | ||||||
Total Metals & Mining | 52,611,292 | |||||||
Virgin Islands (UK) - 0.0% (f) | ||||||||
Metals & Mining - 0.0% (d)(f) | ||||||||
Sailfish Royalty Corp. | 359,769 | 239,612 | ||||||
TOTAL COMMON STOCKS (Cost $816,551,638) | 594,458,170 | |||||||
SHORT-TERM INVESTMENTS - 1.9% | ||||||||
Money Market Funds - 1.9% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (c) | 11,771,116 | 11,771,116 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $11,771,116) | ||||||||
Total Investments (Cost $828,322,754) - 100.0% | 606,229,286 | |||||||
Other Assets in Excess of Liabilities - 0.0% (f) | 128,314 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 606,357,600 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Junior Silver Miners ETF
Schedule of Investments
September 30, 2022 (Continued)
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
PLC | Public Limited Company |
(a) | Non-income producing security. |
(b) | Value determined based on estimated fair value. The value of this security totals $120,472, which represents 0.02% of total net assets. Classified as Level 3 in the fair value hierarchy. Please refer to Note 2 of the Notes to Financial Statements. |
(c) | The rate shown is the annualized seven-day yield at period end. |
(d) | As of September 30, 2022, the Fund had a significant portion of its assets invested in the Metals & Mining Industry. |
(e) | These securities have been deemed illiquid according to the Fund’s liquidity guidelines. The value of these securities total $6,604,009, which represents 1.1% of total net assets. |
(f) | Amount is less than 0.05%. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime 2x Daily Junior Silver Miners ETF
Schedule of Investments
September 30, 2022
Shares | Value | |||||||
SHORT-TERM INVESTMENTS - 24.3% | ||||||||
Money Market Funds - 24.3% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (a) | 481,078 | $ | 481,078 | |||||
TOTAL SHORT-TERM INVESTMENTS (Cost $481,078) | 481,078 | |||||||
Total Investments (Cost $481,078) - 24.3% | 481,078 | |||||||
Other Assets in Excess of Liabilities - 75.7% | 1,501,530 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 1,982,608 |
Percentages are stated as a percent of net assets.
(a) | The rate shown is the annualized seven-day yield at period end. |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime 2x Daily Junior Silver Miners ETF
Schedule of Total Return Swaps
September 30, 2022
Reference Entity |
Fund Pays/Receives Reference Entity |
Counterparty | Payment Frequency |
Financing Rate |
Upfront Premiums Paid/Received |
Notional Amount |
Unrealized Appreciation (Depreciation) |
|||||||||||||
ETFMG Prime Junior Silver Miners ETF Swap | Receives | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.10% | $ | — | $ | 3,899,931 | $ | — |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 2022
ETFMG Prime Junior Silver Miners ETF |
ETFMG Prime 2x Daily Junior Silver Miners ETF |
|||||||
ASSETS | ||||||||
Investments in unaffiliated securities, at value* | $ | 606,229,286 | $ | 481,078 | ||||
Foreign currency* | 730 | — | ||||||
Deposits at Broker for total return swap contracts | — | 1,428,450 | ||||||
Receivable for open swap contracts | — | 73,830 | ||||||
Receivables: | ||||||||
Dividends and interest receivable | 442,641 | 574 | ||||||
Receivable for investments sold | 22,110 | — | ||||||
Total assets | 606,694,767 | 1,983,932 | ||||||
LIABILITIES | ||||||||
Payables: | ||||||||
Management fees payable | 337,167 | 1,324 | ||||||
Total liabilities | 337,167 | 1,324 | ||||||
Net Assets | $ | 606,357,600 | $ | 1,982,608 | ||||
NET ASSETS CONSIST OF: | ||||||||
Paid-in Capital | $ | 1,088,852,070 | $ | 2,382,374 | ||||
Total Distributable Earnings (Accumulated Losses) | (482,494,470 | ) | (399,766 | ) | ||||
Net Assets | $ | 606,357,600 | $ | 1,982,608 | ||||
*Identified Cost: | ||||||||
Investments in unaffiliated securities | $ | 828,322,754 | $ | 481,078 | ||||
Foreign currency | 737 | — | ||||||
Shares Outstanding^ | 66,550,000 | 940,000 | ||||||
Net Asset Value, Offering and Redemption Price per Share | $ | 9.11 | $ | 2.11 |
^ No par value, unlimited number of shares authorized
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
For the Year ended September 30, 2022
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Junior Silver Miners ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment income (loss) | $ | 933,359 | $ | (713,805 | ) | |||
Net realized gain (loss) on investments, in-kind redemptions and foreign currency and foreign currency translation | (130,198,048 | ) | 4,697,566 | |||||
Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | (73,184,613 | ) | (204,205,217 | ) | ||||
Net decrease in net assets resulting from operations | (202,449,302 | ) | (200,221,456 | ) | ||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | (2,774,481 | ) | (7,160,000 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets derived from net change in outstanding shares | 83,589,400 | 527,049,120 | ||||||
Transaction Fees (See Note 1) | 4,914 | 822 | ||||||
Net increase in net assets from capital share transactions | 83,594,314 | 527,049,942 | ||||||
Total increase (decrease) in net assets | (121,629,469 | ) | 319,668,486 | |||||
NET ASSETS | ||||||||
Beginning of Year | 727,987,069 | 408,318,583 | ||||||
End of Year | $ | 606,357,600 | $ | 727,987,069 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 18,400,000 | $ | 245,058,950 | 43,950,000 | $ | 706,233,470 | ||||||||||
Transaction Fees (See Note 1) | — | 4,914 | — | 822 | ||||||||||||
Shares Redeemed | (13,450,000 | ) | (161,469,550 | ) | (11,950,000 | ) | (179,184,350 | ) | ||||||||
Net Transactions in Fund Shares | 4,950,000 | $ | 83,594,314 | 32,000,000 | $ | 527,049,942 | ||||||||||
Beginning Shares | 61,600,000 | 29,600,000 | ||||||||||||||
Ending Shares | 66,550,000 | 61,600,000 |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime 2x Daily Junior Silver Miners ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Period Ended September 30, 20211 |
|||||||
OPERATIONS | ||||||||
Net investment loss | $ | (12,467 | ) | $ | (1,658 | ) | ||
Net realized loss on swap contracts | (2,140,682 | ) | (546,722 | ) | ||||
Net decrease in net assets resulting from operations | (2,153,149 | ) | (548,380 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets from capital share transactions | 3,629,613 | 1,054,524 | ||||||
Total increase in net assets | 1,476,464 | 506,144 | ||||||
NET ASSETS | ||||||||
Beginning of Year/Period | 506,144 | — | ||||||
End of Year/Period | $ | 1,982,608 | $ | 506,144 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Period Ended September 30, 20211 |
||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||
Shares Sold | 1,110,000 | $ | 5,357,120 | 160,000 | $ | 1,345,424 | |||||||||
Shares Redeemed | (280,000 | ) | (1,727,507 | ) | (50,000 | ) | (290,900 | ) | |||||||
Net Transactions in Fund Shares | 830,000 | $ | 3,629,613 | 110,000 | $ | 1,054,524 | |||||||||
Beginning Shares | 110,000 | — | |||||||||||||
Ending Shares | 940,000 | 110,000 |
1 | The Fund commenced operations on June 15, 2021. |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Junior Silver Miners ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, 2018 |
||||||||||||||||
Net Asset Value, | ||||||||||||||||||||
Beginning Year | $ | 11.82 | $ | 13.79 | $ | 9.45 | $ | 8.70 | $ | 11.84 | ||||||||||
Income (Loss) from Investment Operations: | ||||||||||||||||||||
Net investment income (loss)1 | 0.01 | (0.01 | ) | (0.05 | ) | (0.02 | ) | (0.03 | ) | |||||||||||
Net realized and unrealized gain (loss) on investments | (2.68 | ) | (1.76 | ) | 4.56 | 0.91 | (3.11 | ) | ||||||||||||
Total from investment operations | (2.67 | ) | (1.77 | ) | 4.51 | 0.89 | (3.14 | ) | ||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | (0.04 | ) | (0.20 | ) | (0.17 | ) | (0.14 | ) | — | |||||||||||
Total distributions | (0.04 | ) | (0.20 | ) | (0.17 | ) | (0.14 | ) | — | |||||||||||
Capital Share Transactions: | ||||||||||||||||||||
Transaction fees | 0.00 | 2 | 0.00 | 2 | — | — | — | |||||||||||||
Net asset value, end year | $ | 9.11 | $ | 11.82 | $ | 13.79 | $ | 9.45 | $ | 8.70 | ||||||||||
Total Return | (22.63 | )% | (13.06 | )% | 48.06 | % | 10.45 | % | (26.50 | )% | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end year (000’s) | $ | 606,358 | $ | 727,987 | $ | 408,319 | $ | 100,119 | $ | 45,265 | ||||||||||
Gross Expenses to Average Net Assets | 0.69 | % | 0.69 | % | 0.69 | % | 0.69 | % | 0.69 | % | ||||||||||
Net Investment Income (Loss) to Average Net Assets | 0.12 | % | (0.10 | )% | (0.46 | )% | (0.21 | )% | (0.32 | )% | ||||||||||
Portfolio Turnover Rate | 34 | % | 26 | % | 71 | % | 34 | % | 36 | % |
1 | Calculated based on average shares outstanding during the year. |
2 | Amount is less than 0.005. |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime 2x Daily Junior Silver Miners ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year/period
Year Ended September 30, 2022 |
Period Ended September 30, 20211 |
|||||||
Net Asset Value, Beginning Year/Period | $ | 4.60 | $ | 10.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment loss 2 | (0.03 | ) | (0.02 | ) | ||||
Net realized and unrealized loss on investments | (2.46 | ) | (5.38 | ) | ||||
Total from investment operations | (2.49 | ) | (5.40 | ) | ||||
Net asset value, end year/period | $ | 2.11 | $ | 4.60 | ||||
Total Return | (54.16 | )% | (53.98 | )%3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of year/period (000’s) | $ | 1,983 | $ | 506 | ||||
Gross Expenses to Average Net Assets | 0.95 | % | 0.95 | %4 | ||||
Net Investment Loss to Average Net Assets | (0.75 | )% | (0.88 | )%4 | ||||
Portfolio Turnover Rate | 0 | % | 0 | %3 |
1 | The Fund commenced operations on June 15, 2021. |
2 | Calculated based on average shares outstanding during the year/period. |
3 | Not annualized. |
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
September 30, 2022
NOTE 1 – ORGANIZATION
ETFMG Prime Junior Silver Miners ETF (“SILJ”) and ETFMG Prime 2x Daily Junior Silver Miners ETF (“SILX”) (each a “Fund”, or collectively the “Funds”) are series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Funds’ shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”).
The following table is a summary of the Strategy Commencement Date and Strategy of the Funds:
Fund Ticker | Strategy Commencement Date |
Strategy |
ETFMG Prime Junior Silver Miners ETF | 8/1/2017 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Junior Silver Miners & Explorers Index (the “Index”). |
ETFMG Prime 2x Daily Junior Silver Miners ETF | 6/15/2021 | Seeks daily investment results, before fees and expenses, that correspond to two times (2x) the return of the Index for a single day, not for any other period. |
The Funds may use a combination of swaps on the Index and swaps on an ETF whose investment objective is to track the performance of the same, or a substantially similar index to achieve its investment objective.
The Funds each currently offer one class of shares, which have no front-end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of each Fund have equal rights and privileges.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. Market prices for the shares may be different from their net asset value (“NAV”). Each Fund issues and redeems shares on a continuous basis at NAV only in blocks of 50,000 shares for SILJ and 10,000 shares for SILX, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the shares directly from a Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in Transaction Fees” in the Statements of Changes in Net Assets.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Fund may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR(S) for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying Fund’s operations and policies, please refer to those Fund’s semiannual and annual reports, which are filed with the SEC.
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by ETF Managers Group, LLC (the “Adviser”), using procedures adopted by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2022, the ETFMG Prime Junior Silver Miners ETF held two securities that were fair valued by the Adviser.
As described above, the Funds utilize various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following is a summary of the inputs used to value the Funds’ net assets as of September 30, 2022:
ETFMG Prime Junior Silver Miners ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 594,323,651 | $ | 14,047 | $ | 120,472 | $ | 594,458,170 | ||||||||
Short-Term Investments | 11,771,116 | — | — | 11,771,116 | ||||||||||||
Total Investments in Securities | $ | 606,094,767 | $ | 14,047 | $ | 120,472 | $ | 606,229,286 |
ETFMG Prime 2x Daily Junior Silver Miners ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Short-Term Investments | $ | 481,078 | $ | — | $ | — | $ | 481,078 | ||||||||
Total Investments in Securities | $ | 481,078 | $ | — | $ | — | $ | 481,078 |
Swap Contracts* | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Short-Term Investments | $ | — | $ | — | $ | — | $ | — | ||||||||
Total Swap Contracts | $ | — | $ | — | $ | — | $ | — |
^ | See Schedule of Investments for classifications by country and industry. |
* | Swap contracts are derivative instruments, which are presented at the unrealized appreciation/depreciation on the instrument. |
B. | Federal Income Taxes. The Funds have each elected to be taxed as a “regulated investment company” and intend to distribute substantially all taxable income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of each Fund’s next taxable year.
Each Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Each Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2022 tax returns.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The Funds identify their major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
As of September 30, 2022, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for state purposes, generally a range of three to four years from the date of filing), as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Funds may be subject to income, withholding or other taxes imposed by foreign countries. |
D. | Foreign Currency Translations and Transactions. The Funds may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income are generally declared and paid by each of the Funds on a quarterly basis. Distributions to shareholders from realized gains on securities for each Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
G. | Share Valuation. The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. For Authorized Participants, the offering and redemption price per share for the Funds are equal to the Funds’ respective net asset value per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Derivatives
The Funds may enter into swap agreements; including interest rate, index, and total return swap agreements. Swap agreements are contracts between parties in which one party agrees to make periodic payments to the other party based on the change in market value or level of a specified rate, index or asset. In return, the other party agrees to make payments to the first party based on the return of a different specified rate, index or asset. Swap agreements will usually be done on a net basis, i.e., where the two parties make net payments with a Fund receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess, if any, of a Fund’s obligations over its entitlements with respect to each swap is accrued on a daily basis and an amount of cash or equivalents having an aggregate value at least equal to the accrued excess is maintained by the Fund.
The total return swap contracts are subject to master netting agreements, which are agreements between a Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund through a single payment, in the event of default or termination. Amounts presented on the schedule of total return swaps are gross settlement amounts.
The following table presents the Funds’ gross derivative assets and liabilities by counterparty and contract type, net of amounts available for offset under a master netting agreement and the related collateral received or pledged by the Funds as of September 30, 2022.
ETFMG Prime 2x Daily Junior Silver Miners ETF
Gross Amounts of Recognized Assets Presented in the |
Gross | Gross Amounts not offset in the Statements of Assets & Liabilities |
|||||||||||||||||||||||
Counterparty | Investment Type |
Statements of Assets & Liabilities |
Amounts Available Offset |
Net Amounts |
Financial Instruments |
Collateral Received |
Net Amount |
||||||||||||||||||
Cowen and Company, LLC | Total Return Swap Contract | $ | 73,830 | $ | — | $ | 73,830 | $ | — | $ | — | $ | 73,830 |
The average monthly notional amount of the swap contracts during the year ended September 30, 2022 for SILX was $3,272,666.
The following is a summary of the effect of swap contracts on the Funds’ Statements of Assets and Liabilities as of September 30, 2022:
Assets | Liabilities | Net Unrealized Gain (Loss) |
||||||||||||
ETFMG Prime 2x Daily Junior Silver Miners ETF | Swap Contract | $ | 73,830 | $ | — | $ | — |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The following is a summary of the effect of swap contracts on the Funds’ Statements of Operations for the year ended September 30, 2022:
Realized Gain (Loss) | Change in Unrealized Appreciation/Depreciation | |||||||||
ETFMG Prime 2x | ||||||||||
Daily Junior Silver Miners ETF | Swap Contract | $ | (2,140,682 | ) | $ | — |
NOTE 3 – RISK FACTORS
Investing in the Funds may involve certain risks, as discussed in the Funds’ prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a Fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Funds, other than VALT, are not actively managed (“Index Funds”). Therefore, those Funds follow the securities included in its respective index during upturns as well as downturns. Because of their indexing strategies, the Index Funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Index Funds’ expenses, the Index Funds’ performance may be below that of their respective index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that a Fund’s or an index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID- 19),have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect lobal, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility. exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. A Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, leverage, imperfect daily correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions. The use of derivatives is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The use of derivatives may result in larger losses or smaller gains than directly investing in securities. When a Fund uses derivatives, there may be imperfect correlation between the value of the reference assets and the derivative, which may prevent the Fund from achieving its investment objective. Because derivatives often require only a limited initial investment, the use of derivatives may expose a Fund to losses in excess of those amounts initially invested.
Daily Index Correlation/Tracking Risk. There is no guarantee that a Fund will achieve a high degree of correlation to the Index and therefore achieve its daily leveraged investment objective. To achieve a high degree of correlation with the Index, a Fund seeks to rebalance its portfolio daily to keep leverage consistent with its daily leveraged investment objective. In addition, a Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that a Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day. Market disruptions, regulatory restrictions and extreme volatility will also adversely affect a Fund’s ability to adjust exposure to the required levels.
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Funds.
A complete description of the principal risks is included in each Fund’s prospectus under the heading “Principal Investment Risks.”
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
The Adviser serves as the investment advisor to the Funds. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Funds, and the Adviser, the Adviser provides investment advice to the Funds and oversees the day-to-day operations of the Funds, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Adviser is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Funds to operate.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Under the Investment Advisory Agreement, the Adviser has overall responsibility for the general management and administration of the Funds and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Funds to operate. The Funds unitary fees are accrued daily and paid monthly. The Adviser bears the costs of all advisory and non- advisory services required to operate the Funds, in exchange for a single unitary fee at the following annual rates:
ETFMG Prime Junior Silver Miners ETF | 0.69% |
ETFMG Prime 2x Daily Junior Silver Miners ETF | 0.95% |
Under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Funds, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Adviser has entered into an agreement with its affiliate ETFMG Financial, LLC to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds. Level ETF Ventures, LLC (“Level”) serves as the index provider for SILJ and SILX. Level is not affiliated with the Trust or the Adviser.
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Funds. The Adviser compensates the Administrator for these services under an administration agreement between the two parties.
The Adviser pays each independent Trustee a quarterly fee for service to the Funds. Each Trustee is also reimbursed by the Adviser for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Funds have each adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to each Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. During the year ended September 30, 2022, the Funds did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, during the year ended September 30, 2022:
Purchases | Sales | |||||||
ETFMG Prime Junior Silver Miners ETF | $ | 250,498,204 | $ | 263,202,763 |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the year ended September 30, 2022:
Purchases In- Kind |
Sales In- Kind |
|||||||
ETFMG Prime Junior Silver Miners ETF | $ | 241,832,399 | $ | 153,968,835 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Funds’ determination of taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations during the year ended September 30, 2022.
NOTE 7 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2022 were as follows:
Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
ETFMG Prime Junior Silver Miners ETF | $ | 872,535,620 | $ | 39,564,185 | $ | (305,870,519 | ) | $ | (266,306,334 | ) | ||||||
ETFMG Prime 2x Daily Junior Silver Miners ETF | $ | 481,078 | — | — | — |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the components of distributable earnings (loss) on a tax basis were as follows:
Undistributed Ordinary Income |
Undistributed Long-Term Gain |
Total Distributable Earnings |
Other Accumulated Loss |
Total Accumulated Gain (Loss) |
||||||||||||||||
ETFMG Prime Junior Silver Miners ETF | $ | — | $ | — | $ | — | $ | (216,188,136 | ) | $ | (482,494,470 | ) | ||||||||
ETFMG Prime 2x Daily Junior Silver Miners ETF | — | — | — | (399,766 | ) | (399,766 | ) |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the Funds had accumulated capital loss carryovers of:
Capital Loss Carryforward ST |
Capital Loss Carryforward LT |
Expires | ||||||||
ETFMG Prime Junior Silver Miners ETF | $ | (96,264,792 | ) | $ | (115,329,264 | ) | Indefinite | |||
ETFMG Prime 2x Daily Junior Silver Miners ETF | (399,766 | ) | — | Indefinite |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ending September 30, 2022.
Late Year Ordinary Loss |
Post- October Capital Loss |
|||||||
ETFMG Prime Junior Silver Miners ETF | $ | (4,593,857 | ) | $ | — | |||
ETFMG Prime 2x Daily Junior Silver Miners ETF | — | — |
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2022, the following table shows the reclassifications made:
Total Distributable Earnings/(Loss) |
Paid-In Capital |
|||||||
ETFMG Prime Junior Silver Miners ETF | $ | (12,343,306 | ) | $ | 12,343,306 | |||
ETFMG Prime 2x Daily Junior Silver Miners ETF | 1,911,223 | (1,911,223 | ) |
The tax charter of distributions paid during the year ended September 30, 2022, and the year ended September 30, 2021 were as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
From Ordinary Income |
From Capital Gains |
From Ordinary Income |
From Capital Gains |
|||||||||||||
ETFMG Prime Junior Silver Miners ETF | $ | 2,774,481 | $ | — | $ | 7,160,000 | $ | — | ||||||||
ETFMG Prime 2x Daily Junior Silver Miners ETF | — | — | — | — |
NOTE 8 – LEGAL MATTERS
The Trust, the Adviser, and certain officers and affiliated persons of the Adviser (together with the Adviser, the “Adviser Defendants”) were named as defendants in an action filed December 21, 2021, in the Superior Court of New Jersey, Union County, captioned PureShares, LLC, d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. UNN-C-152-21 (the “NJ Action”). The NJ Action asserted breach of contract and other tort claims and sought damages in unspecified amounts and injunctive relief. On May 25, 2022, the court in the NJ Action dismissed with prejudice all claims asserted against the Trust, as well as all contract claims and all except one tort claim asserted against the Adviser Defendants.
As of September 30, 2022, there were no adjustments made to the accompanying financial statements based on the above legal matters.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 9 – SUBSEQUENT EVENTS
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.
ETFMG™ ETFs
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of ETFMG Prime Junior Silver Miners ETF and ETFMG Prime 2x Daily Junior Silver Miners ETF:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments of ETFMG Prime Junior Silver Miners ETF and the schedule of investments and total return swaps of ETFMG Prime 2x Daily Junior Silver Miners ETF (collectively the “Funds”) (certain of the Funds comprising ETF Managers Trust) as of September 30, 2022, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of periods indicated therein, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of September 30, 2022, and the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor of one or more series of the Trust since 2013.
New York, New York
November 29, 2022
ETFMG™ ETFs
Six Months Ended September 30, 2022 (Unaudited)
As a shareholder of the Funds you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 invested for the period of time as indicated in the table below.
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
Fund Name | Beginning Account Value April 1, 2022 |
Ending Account Value September 30, 2022 |
Expenses Paid During the Period^ |
Annualized Expense Ratio During the Period April 1, 2022 to September 30, 2022 |
||||||||||||
ETFMG Prime Junior Silver Miners ETF | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 647.70 | $ | 2.85 | 0.69 | % | ||||||||
Hypothetical (5% annual) | 1,000.00 | 1,021.61 | 3.50 | 0.69 | % | |||||||||||
ETFMG Prime 2x Daily Junior Silver Miners ETF | ||||||||||||||||
Actual | 1,000.00 | 358.10 | 3.23 | 0.95 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,020.31 | 4.81 | 0.95 | % |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/365 (to reflect the one-half year period).
ETFMG™ ETFs
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
ETFMG™ ETFs
Board of Trustees (Continued)
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
Terry Loebs (1963) | Trustee (since 2014); Lead Independent Trustee (since 2020) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 17 | None |
Eric Wiegel (1960) | Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017- 2018). | 17 | None |
ETFMG™ ETFs
SUPPLEMENTARY INFORMATION
September 30, 2022
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2022, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Fund Name | Qualified Dividend Income |
ETFMG Prime Junior Silver Miners ETF | 100.00% |
ETFMG Prime 2x Daily | 0.00% |
Junior Silver Miners ETF |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2022 was as follows:
Fund Name | Dividends Received Deduction |
ETFMG Prime Junior Silver Miners ETF | 6.11% |
ETFMG Prime 2x Daily | 0.00% |
Junior Silver Miners ETF |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for each Fund were as follows:
Fund Name | Short-Term Capital Gain |
ETFMG Prime Junior Silver Miners ETF | 0.00% |
ETFMG Prime 2x Daily | 0.00% |
Junior Silver Miners ETF |
During the year ended September 30, 2022, the Funds did not declare any long-term realized gains distributions.
Pursuant to Section 853 of the Internal Revenue Code, the Fund designated the following amounts as foreign taxes paid for the year ended September 30, 2022. Foreign taxes paid for purposes of Section 853 may be less than actual foreign taxes paid for financial statement purposes.
Per Share | ||||||||||||||||||||
Fund | Gross Foreign Source Income |
Foreign Taxes Passthrough |
Gross Foreign Source Income |
Foreign Taxes Passthrough |
Shares Outstanding at 9/30/22 |
|||||||||||||||
ETFMG Prime Junior Silver Miners ETF | $ | 6,758,031 | $ | 790,427 | 0.10154817 | 0.01187718 | 66,550,000 |
ETFMG™ ETFs
SUPPLEMENTARY INFORMATION
September 30, 2022 (Unaudited) (Continued)
Foreign taxes paid or withheld should be included to taxable income with an offsetting deduction from gross income or as a credit for taxes paid to foreign governments.
Above figures may differ from those cited elsewhere in this report due to difference in the calculation of income and gains under GAAP purposes and Internal Revenue Service purposes.
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the Securities and Exchange Commission (“SEC”) on Part F of Form N-PORT. The Funds’ Part F of Form N-PORT is available on the website of the SEC at www.sec.gov and the Funds’ website at www.etfmgfunds.com. Each Fund’s portfolio holdings are posted on their website at www.etfmgfunds.com daily.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at (877) 756-7873, by accessing the SEC’s website at www.sec.gov, or by accessing the Funds’ website at www.etfmgfunds.com.
Information regarding how the Funds voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at (877) 756-7873 or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
ETFMG™ ETFs
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S. Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
ETFMG Prime Cyber Security ETF
HACK
ETFMG Prime Mobile Payments ETF
IPAY
ETFMG Sit Ultra Short ETF
VALT
ETFMG Treatments, Testing and
Advancements ETF
GERM
Annual Report
September 30, 2022
The funds are series of ETF Managers Trust.
ETFMG™ ETFs
TABLE OF CONTENTS
September 30, 2022
ETFMG™ ETFs
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these ETFs. The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
Market Overview
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and, in many cases, unprecedented volatility and severe losses due to the global pandemic caused by COVID-19. Some sectors of the economy and individual issuers have experienced particularly large losses because of these disruptions. In response to these disruptions, the U.S. government and the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, contributing to inflationary pressure and expectations for inflation. Further, Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict have increased volatility and uncertainty in the financial markets and adversely affect regional and global economies. The full extent and duration of these conditions and the totality of repercussions are impossible to predict but could continue to result in significant market disruptions and may continue to negatively affect global supply chains, inflation and global growth. These and related events have impacted the ETFs’ performance, among other factors, and the value of an investment in the ETFs. We encourage you to talk with your financial advisor and visit etfmg.com for further insight about investing in today’s markets.
Performance Overview
During the fiscal year-ended September 30, 2022, the S&P 500 Information Technology Sector Index, a broad measure of US listed technology companies, returned -20.0%. During the same period, the S&P Global 1200 Information Technology Sector Index, a broad measure of global technology companies, returned -24.5%. Also, during that period, the S&P 500, a broad measure of US listed companies, returned -15.47%. Below is a performance overview for each Fund for the same 12-month period, except as noted otherwise.
ETFMG Prime Cyber Security ETF (HACK)
The ETFMG Prime Cyber Security ETF (“HACK”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Cyber Defense Index (the “PCD Index”).
Over the period, the total return for HACK was -28.77%, while the total return for the PCD Index was -28.56%. The best performers in HACK, on the basis of contribution to return were, Mandiant Inc, Sailpoint Technologies Holdi, Qualys Inc, Mantech International Corp-A and Booz Allen Hamilton Holdings, while the worst performers were Okta Inc, Splunk Inc, Cloudflare Inc - Class A, Akamai Technologies Inc, and Zscaler Inc.
During the reporting period, HACK saw an average approximate allocation of 79% to the Information Technology sector and 20.17% to Industrials. The portfolio securities held by HACK were exposed predominately to the United States at 84.76%, 6.41% to the United Kingdom, and 4.65% to Israel.
ETFMG Prime Mobile Payments ETF (IPAY)
The ETFMG Prime Mobile Payments ETF (“IPAY”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Mobile Payments Index (the “PMP Index”).
Over the period, the total return for IPAY was -44.18%, while the total return for the PMP Index was -44.31%. The best performers in IPAY, on the basis of contribution to return were, Cielo Sa, Evo Payments Inc-Class A, Jack Henry & Associates Inc, International Money Express and Moneygram International Inc, while the worst performers were Block Inc, Paypal Holdings Inc, Adyen Nv, Affirm Holdings Inc, and Nuvei Corp-Subordinate Vtg.
During the reporting period, IPAY saw an average approximate allocation of 86.69% to the IT Services sector and 12.0% to Consumer Finance. The portfolio securities held by IPAY were exposed predominately to the United States at 70.99%, followed by the Brazil at 4.25% and the Netherlands at 4.05%.
ETFMG Sit Ultra Short ETF (VALT)
The ETFMG Sit Ultra Short ETF (“VALT”) is an actively managed exchange-traded fund that seeks maximum current income, consistent with preservation of capital and daily liquidity.
Over the fiscal period, the total return for VALT was -2.29%, while the total return for its benchmark, the Bloomberg Barclays U.S. Treasury Bills Index: 1-3 month Index, was 0.64%.
VALT seeks to achieve its investment objective by investing in a diversified portfolio of high-quality, short-term U.S. dollar-denominated domestic and foreign debt securities and other instruments. VALT uses the Bloomberg Barclays U.S. Treasury Bills Index: 1-3-month Index as its benchmark index. During normal market conditions, the average portfolio effective duration for VALT is expected be more than 2 months, but less than 1 year. However, VALT is not a money market fund, does not seek to maintain a fixed or stable net asset value of $1, is not subject to the rules that govern the quality, maturity, liquidity, and other features of securities that money market funds may purchase, and does not have the tax advantages of a money market fund.
ETFMG Treatments, Testing and Advancements ETF (GERM)
The ETFMG Treatments, Testing and Advancements ETF (“GERM”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Treatments, Testing and Advancements Index (the “PTT Index”).
Over the fiscal period, the total return for GERM was - 49.14%, while the total return for the PTT Index was -49.35%. The best performers in GERM, on the basis of contribution to return were, Dicerna Pharmaceuticals Inc, Immunocore Holdings Plc-Adr, Meridian Bioscience Inc, Eli Lilly & Co and Abbvie Inc, while the worst performers were Novavax Inc, Moderna Inc, Curevac Nv, I-Mab-Sponsored Adr, and Biontech Se-Adr.
During the reporting period, GERM saw an average approximate allocation of 99.5% of its portfolio holdings to the Health Care sector. The portfolio securities held by GERM were exposed predominately to the United States at 78.56% followed by Germany at 8.3%, and China at 3.9%.
You can find further details about HACK, IPAY, VALT, and GERM by visiting www.etfmg.com, or by calling 1-844-383-6477.
Sincerely,
Samuel Masucci III
Chairman of the Board
ETFMG Prime Cyber Security ETF
Since | Value of | |||||||||||||||
Average Annual Returns | 1 Year | 5 Year | Inception | $10,000 | ||||||||||||
Year Ended September 30, 2022 | Return | Return | (11/11/14) | (9/30/2022) | ||||||||||||
ETFMG Prime Cyber Security ETF (NAV) | -28.77 | % | 8.12 | % | 7.75 | % | $ | 18,018 | ||||||||
ETFMG Prime Cyber Security ETF (Market) | -28.61 | % | 8.13 | % | 7.75 | % | $ | 18,017 | ||||||||
S&P 500 Index | -15.47 | % | 9.24 | % | 9.48 | % | $ | 20,423 | ||||||||
Prime Cyber Defense Index* | -28.56 | % | 8.50 | % | 8.19 | % | $ | 18,596 |
* The Fund’s benchmark before 8/1/17 was the ISE Cyber Security Index. On 8/1/17, the Fund’s benchmark became the Prime Cyber Defense Index.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 11, 2014, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Prime Cyber Security ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments | ||
1 | Zscaler, Inc. | 4.84% | |
2 | Fortinet, Inc. | 4.70% | |
3 | BAE Systems PLC | 4.66% | |
4 | Crowdstrike Holdings, Inc. - Class A | 4.42% | |
5 | VeriSign, Inc. | 4.42% | |
6 | Cloudflare, Inc. - Class A | 4.33% | |
7 | Booz Allen Hamilton Holding Corp. | 4.19% | |
8 | Palo Alto Networks, Inc. | 4.18% | |
9 | NortonLifeLock, Inc. | 4.15% | |
10 | Leidos Holdings, Inc. | 4.14% |
Top Ten Holdings = 44.03% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG Prime Mobile Payments ETF
Growth of $10,000 (Unaudited)
Since | Value of | |||||||||||||||
Average Annual Returns | 1 Year | 5 Year | Inception | $10,000 | ||||||||||||
Year Ended September 30, 2022 | Return | Return | (7/15/15) | (9/30/2022) | ||||||||||||
ETFMG Prime Mobile Payments ETF (NAV) | -44.18 | % | 3.21 | % | 6.11 | % | $ | 15,336 | ||||||||
ETFMG Prime Mobile Payments ETF (Market) | -44.21 | % | 3.08 | % | 6.06 | % | $ | 15,287 | ||||||||
S&P 500 Index | -15.47 | % | 9.24 | % | 9.70 | % | $ | 19,493 | ||||||||
Prime Mobile Payments Index* | -44.31 | % | 3.68 | % | 6.65 | % | $ | 15,907 |
* The Fund’s benchmark before 8/1/17 was the ISE Mobile Payments Index. On 8/1/17, the Fund’s benchmark became the Prime Mobile Payments Index.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on July 15, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Prime Mobile Payments ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments | ||
1 | ETFMG Sit Ultra Short ETF** | 7.26% | |
2 | PayPal Holdings, Inc. | 5.17% | |
3 | Fiserv, Inc. | 5.02% | |
4 | American Express Co. | 4.98% | |
5 | Visa, Inc. - Class A | 4.95% | |
6 | MasterCard, Inc. - Class A | 4.87% | |
7 | Fidelity National Information Services, Inc. | 4.01% | |
8 | Adyen NV | 3.63% | |
9 | Block, Inc. | 3.06% | |
10 | Global Payments, Inc. | 2.96% |
Top Ten Holdings= 45.91% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
** Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.
ETFMG Sit Ultra Short ETF
Growth of $10,000 (Unaudited)
Since | Value of | |||||||||||
Average Annual Returns | 1 Year | Inception | $10,000 | |||||||||
Year Ended September 30, 2022 | Return | (10/8/2019) | (9/30/2022) | |||||||||
ETFMG Sit Ultra Short ETF (NAV) | -2.29 | % | -0.13 | % | $ | 9,962 | ||||||
ETFMG Sit Ultra Short ETF (Market) | -2.36 | % | -0.16 | % | $ | 9,954 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on October 8, 2019, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Sit Ultra Short ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments | ||
1 | Brighthouse Financial Global Funding | 2.96% | |
2 | Brown & Brown, Inc. | 2.75% | |
3 | Triton Container International, Ltd. | 2.62% | |
4 | Nationwide Mutual Insurance Co. | 2.43% | |
5 | General Mills, Inc. | 2.34% | |
6 | CNO Global Funding | 2.23% | |
7 | Truist Bank | 2.17% | |
8 | Kinder Morgan, Inc. | 2.10% | |
9 | First Horizon Corp. | 2.08% | |
10 | Citigroup, Inc. | 2.00% |
Top Ten Holdings = 23.68% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG Treatments, Testing and Advancements ETF
Growth of $10,000 (Unaudited)
Since | Value of | |||||||||||
Average Annual Returns | 1 Year | Inception | $10,000 | |||||||||
Year Ended September 30, 2022 | Return | (6/17/2020) | (9/30/2022) | |||||||||
ETFMG Treatments, Testing and Advancements ETF (NAV) | -49.14 | % | -7.23 | % | $ | 8,423 | ||||||
ETFMG Treatments, Testing and Advancements ETF (Market) | -49.19 | % | -7.21 | % | $ | 8,427 | ||||||
S&P 500 Index | -15.47 | % | 8.00 | % | $ | 11,925 | ||||||
Prime Treatments, Testing and Advancements Index NTR | -49.35 | % | -7.60 | % | $ | 8,363 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on June 17, 2020, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Treatments, Testing and Advancements ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments | ||
1 | Quest Diagnostics, Inc. | 5.18% | |
2 | Alnylam Pharmaceuticals, Inc. | 5.04% | |
3 | BioNTech SE - ADR | 4.86% | |
4 | Laboratory Corp. of America Holdings | 4.80% | |
5 | Moderna, Inc. | 4.53% | |
6 | ETFMG Sit Ultra Short ETF** | 4.31% | |
7 | QuidelOrtho Corp. | 3.18% | |
8 | Bio-Rad Laboratories, Inc. - Class A | 3.04% | |
9 | AbCellera Biologics, Inc. | 2.99% | |
10 | Vir Biotechnology, Inc. | 2.71% |
Top Ten Holdings = 40.64% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
** Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.
ETFMG™ ETFs
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
HACK
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Cyber Defense Index (the “Index”).
The fund is concentrated in technology-related companies face intense competition, both domestically and internationally, which may have an adverse effect on profit margins. Such companies may have limited product lines, markets, financial resources or personnel. The products of such companies may face obsolescence due to rapid technological developments, frequent new product introduction, unpredictable changes in growth rates, competition for the services of qualified personnel, and competition from foreign competitors with lower production costs. Technology companies are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Funds are non-diversified, meaning they may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Diversification does not assure a profit or protect against a loss in a declining market. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Cyber Defense Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Prime Cyber Defense Index. The Prime Cyber Defense Index provides a benchmark for investors interested in tracking companies actively involved in providing cyber security technology and services. The Index uses a market capitalization weighted allocation across the infrastructure provider and service provider categorizations as well as an equal weighted allocation methodology for all components within each sector allocation. Index components are reviewed semi-annually for eligibility, and the weights are re-set accordingly. An investment cannot be made directly in an index.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETFMG™ ETFs
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG Financial LLC is not affiliated with Prime Indexes.
IPAY
The ETFMG Prime Mobile Payments ETF (the “Fund” or the “Mobile Payments ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Mobile Payments Index (the “Index”).
Mobile Payment Companies face intense competition, both domestically and internationally, and are subject to increasing regulatory constraints, particularly with respect to fees, competition and anti-trust matters, cybersecurity and privacy. Mobile Payment Companies may be highly dependent on their ability to enter into agreements with merchants and other third parties to utilize a particular payment method, system, software or service, and such agreements may be subject to increased regulatory scrutiny. Additionally, certain Mobile Payment Companies have recently faced increased costs related to class-action litigation challenging such agreements. Such factors may adversely affect the profitability and value of such companies. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Mobile Payments Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
The Prime Mobile Payments Index is designed to provide a benchmark for investors interested in tracking the mobile and electronic payments industry. The stocks are screened for liquidity and weighted according to a modified linear-based capitalization-weighted methodology. The Index generally is comprised of 25-40 securities. An investment cannot be made directly in an index.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
ETF Managers Group LLC is the investment adviser to the Fund.
ETFMG™ ETFs
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG Financial LLC is not affiliated with Prime Indexes.
VALT
The ETFMG Sit Ultra Short ETF (the “Fund” or the “Ultra Short ETF”) seeks maximum current income, consistent with preservation of capital and daily liquidity.
The market price of the Fund’s fixed-income instruments may change, sometimes rapidly or unpredictably, in response to changes in interest rates, factors affecting securities markets generally, and other factors. Generally, when interest rates rise, the values of fixed-income instruments fall, and vice versa. The Fund may invest in floating rate securities, which are generally less sensitive to interest rate changes than securities with fixed interest rates but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. The Fund may invest in U.S. dollar-denominated debt obligations of foreign issuers. Mortgage- and asset-backed securities are subject to interest rate risk. Modest movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain types of these securities. From time to time the Fund may invest a substantial amount of its assets in taxable or tax-exempt municipal securities whose interest is paid solely from revenues of similar projects.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
The Fund’s investment strategy may require it to redeem shares for cash or to otherwise include cash as part of its redemption proceeds. In the event of large shareholder redemptions, the Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund’s performance.
Distributed by ETFMG Financial LLC, which is not affiliated with Sit Investment Associates.
GERM
The ETFMG Treatments, Testing and Advancements ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Treatments, Testing and Advancements Index (the “Index”).
Vaccine development companies are involved in discovering, developing and commercializing novel drugs with significant market potential. These companies face challenges including pre-clinical testing and clinical trial stages of development. Clinical trials may be delayed, and certain programs may never advance in the clinic or may be more costly to conduct than anticipated. Vaccine development requires companies to seek and secure significant funding. If there are delays in obtaining required regulatory and marketing approvals the ability of vaccine development companies to generate revenue will be materially impaired. If regulatory approval is obtained, products will still remain subject to regulatory scrutiny with regulatory authorities having the ability impose significant restrictions on the indicated uses or marketing. Lastly, even if a licensed product is achieved, vaccine development companies may encounter difficulties in manufacturing, product release, shelf life, testing, storage, supply chain management, or shipping.
ETFMG™ ETFs
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
The Fund is distributed by ETFMG Financial LLC, which is not affiliated with Prime Indexes.
ETFMG™ ETFs
As of September 30, 2022 (Unaudited)
ETFMG Prime Cyber Security ETF |
ETFMG Prime Mobile Payments ETF |
ETFMG Sit Ultra Short ETF |
ETFMG Treatments, Testing and Advancements ETF |
|||||||||||||
As a percent of Net Assets: | ||||||||||||||||
Australia | — | % | 0.2 | % | — | % | — | % | ||||||||
Bermuda | — | 1.1 | 2.6 | — | ||||||||||||
Brazil | — | 1.4 | — | — | ||||||||||||
Canada | 1.2 | 1.4 | 0.8 | 4.6 | ||||||||||||
Cayman Islands | 0.0 | * | 5.9 | — | 3.8 | |||||||||||
Cyprus | — | 0.0 | * | — | — | |||||||||||
Finland | 0.2 | — | — | — | ||||||||||||
France | — | 2.1 | — | 0.8 | ||||||||||||
Germany | 0.1 | — | — | 6.2 | ||||||||||||
Ireland | — | — | 1.4 | — | ||||||||||||
Isle of Man | 0.2 | — | — | — | ||||||||||||
Israel | 6.9 | — | — | — | ||||||||||||
Italy | — | 2.1 | — | — | ||||||||||||
Japan | 1.7 | 2.3 | — | 0.8 | ||||||||||||
Netherlands | — | 4.3 | — | 2.1 | ||||||||||||
Puerto Rico | — | 1.3 | — | — | ||||||||||||
Republic of Korea | — | 1.6 | — | — | ||||||||||||
Sweden | 0.0 | * | — | — | — | |||||||||||
United Kingdom | 6.3 | 4.2 | 1.8 | 4.3 | ||||||||||||
United States | 82.6 | 70.5 | 80.4 | 76.9 | ||||||||||||
Municipal Bonds | — | — | 4.2 | — | ||||||||||||
U.S. Government Agency Issues | — | — | 4.4 | — | ||||||||||||
Short-Term and other Net Assets (Liabilities) | 0.8 | 1.6 | 4.4 | 0.5 | ||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
* Amount is less than 0.05%.
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Cyber Security ETF
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 99.2% | ||||||||
Canada - 1.2% | ||||||||
Software - 1.2% (d) | ||||||||
Absolute Software Corp. | 267,236 | $ | 3,091,491 | |||||
BlackBerry, Ltd. (a)(b) | 3,029,643 | 14,278,044 | ||||||
Total Software | 17,369,535 | |||||||
Cayman Islands - 0.0% (f) | ||||||||
Software - 0.0% (d)(f) | ||||||||
Arqit Quantum, Inc. (a)(b) | 131,995 | 743,132 | ||||||
Finland - 0.2% | ||||||||
Software - 0.2% (d) | ||||||||
F-Secure Oyj (a) | 614,851 | 1,478,436 | ||||||
WithSecure Oyj (a) | 603,121 | 947,748 | ||||||
Total Software | 2,426,184 | |||||||
Germany - 0.1% | ||||||||
IT Services - 0.1% | ||||||||
Secunet Security Networks AG | 8,689 | 1,571,984 | ||||||
Isle Of Man - 0.2% | ||||||||
Software - 0.2% (d) | ||||||||
Kape Technologies PLC (a) | 797,951 | 2,378,831 | ||||||
Israel - 6.9% | ||||||||
Communications Equipment - 0.3% | ||||||||
Radware, Ltd. (a) | 195,925 | 4,269,206 | ||||||
Software - 6.6% (d) | ||||||||
Allot Communications, Ltd. (a) | 186,614 | 731,527 | ||||||
Check Point Software Technologies, Ltd. (a) | 537,262 | 60,184,089 | ||||||
Cognyte Software, Ltd. (a) | 353,820 | 1,429,433 | ||||||
CyberArk Software, Ltd. (a) | 213,896 | 32,071,566 | ||||||
Total Software | 94,416,615 | |||||||
Total Israel | 98,685,821 | |||||||
Japan - 1.7% | ||||||||
Software - 1.7% (d) | ||||||||
Cyber Security Cloud, Inc. (a) | 29,470 | 350,431 | ||||||
Digital Arts, Inc. | 43,547 | 1,892,563 | ||||||
Trend Micro, Inc. | 406,473 | 21,962,405 | ||||||
Total Software | 24,205,399 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Cyber Security ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Sweden - 0.0% (f) | ||||||||
Electronic Equipment, Instruments & Components - 0.0% (f) | ||||||||
Fingerprint Cards AB - Class B (a)(b) | 1,360,334 | $ | 690,608 | |||||
United Kingdom - 6.3% | ||||||||
Aerospace & Defense - 5.7% | ||||||||
BAE Systems PLC | 8,066,215 | 71,131,692 | ||||||
QinetiQ Group PLC | 2,754,321 | 10,148,566 | ||||||
Total Aerospace & Defense | 81,280,258 | |||||||
IT Services - 0.3% | ||||||||
NCC Group PLC | 1,671,367 | 4,077,552 | ||||||
Software - 0.3% (d) | ||||||||
Darktrace PLC (a) | 1,246,459 | 4,106,988 | ||||||
Total United Kingdom | 89,464,798 | |||||||
United States - 82.6% | ||||||||
Aerospace & Defense - 1.5% | ||||||||
Parsons Corp. (a)(b) | 548,622 | 21,505,982 | ||||||
Communications Equipment - 11.5% | ||||||||
Cisco Systems, Inc. | 1,564,188 | 62,567,520 | ||||||
F5 Networks, Inc. (a) | 316,152 | 45,756,679 | ||||||
Juniper Networks, Inc. | 1,698,612 | 44,367,745 | ||||||
NetScout Systems, Inc. (a) | 366,042 | 11,464,435 | ||||||
Total Communications Equipment | 164,156,379 | |||||||
IT Services - 17.1% | ||||||||
Akamai Technologies, Inc. (a)(b) | 785,302 | 63,075,457 | ||||||
Cerberus Cyber Sentinel Corp. (a)(b) | 267,263 | 788,426 | ||||||
Cloudflare, Inc. - Class A (a)(b) | 1,194,242 | 66,053,525 | ||||||
Okta, Inc. (a)(b) | 797,534 | 45,355,759 | ||||||
SolarWinds Corp. (a) | 213,414 | 1,653,959 | ||||||
VeriSign, Inc. (a) | 388,325 | 67,452,053 | ||||||
Total IT Services | 244,379,179 | |||||||
Professional Services - 12.9% | ||||||||
Booz Allen Hamilton Holding Corp. | 692,802 | 63,980,265 | ||||||
CACI International, Inc. - Class A (a)(b) | 122,944 | 32,095,761 | ||||||
Leidos Holdings, Inc. | 721,781 | 63,134,184 | ||||||
Science Applications International Corp. (b) | 295,510 | 26,131,949 | ||||||
Total Professional Services | 185,342,159 | |||||||
Software - 39.6% (d) | ||||||||
A10 Networks, Inc. (b) | 356,342 | 4,728,658 | ||||||
CommVault Systems, Inc. (a)(b) | 236,486 | 12,543,217 | ||||||
Crowdstrike Holdings, Inc. - Class A (a)(b) | 409,561 | 67,499,748 | ||||||
Everbridge, Inc. (a)(b) | 203,566 | 6,286,118 | ||||||
ForgeRock, Inc. - Class A (a)(b) | 168,865 | 2,453,608 | ||||||
Fortinet, Inc. (a) | 1,459,159 | 71,688,482 | ||||||
KnowBe4, Inc. - Class A (a) | 395,799 | 8,236,577 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Cyber Security ETF
Schedule of Investments
September 30, 2022 (Continued)
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Cyber Security ETF
Schedule of Investments
September 30, 2022 (Continued)
Percentages are stated as a percent of net assets.
PLC | Public Limited Company |
(a) | Non-income producing security. |
(b) | All or a portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the annualized seven-day yield at period end. |
(d) | As of September 30, 2022 the Fund had a significant portion of its assets in the Software Industry. |
(e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
(f) | Amount is less than 0.05%. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Mobile Payments ETF
Schedule of Investments
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 98.4% | ||||||||
Australia - 0.2% | ||||||||
IT Services - 0.2% (d) | ||||||||
EML Payments, Ltd. (a) | 2,243,948 | $ | 1,148,277 | |||||
Bermuda - 1.1% | ||||||||
Electronic Equipment, Instruments & Components - 1.1% | ||||||||
PAX Global Technology, Ltd. | 7,148,276 | 5,427,468 | ||||||
Brazil - 1.4% | ||||||||
IT Services - 1.4% (d) | ||||||||
Cielo SA | 7,164,652 | 7,172,156 | ||||||
Canada - 1.4% | ||||||||
IT Services - 1.4% (d) | ||||||||
Nuvei Corp. (a)(f) | 269,095 | 7,272,101 | ||||||
Cayman Islands - 5.9% | ||||||||
IT Services - 5.9% (d) | ||||||||
Dlocal, Ltd. (a)(b) | 378,022 | 7,757,011 | ||||||
Pagseguro Digital, Ltd. - Class A (a) | 555,681 | 7,351,660 | ||||||
StoneCo., Ltd. - Class A (a)(b) | 806,977 | 7,690,491 | ||||||
Yeahka, Ltd. (a) | 3,031,345 | 6,843,035 | ||||||
Total IT Services | 29,642,197 | |||||||
Cyprus - 0.0% (i) | ||||||||
IT Services - 0.0% (d)(i) | ||||||||
QIWI PLC - ADR (b)(g) | 235,051 | — | ||||||
France - 2.1% | ||||||||
IT Services - 2.1 (d) | ||||||||
Worldline SA (a)(f) | 265,265 | 10,575,660 | ||||||
Italy - 2.1% | ||||||||
IT Services - 2.1% (d) | ||||||||
Nexi SpA (a)(f) | 1,322,173 | 10,809,486 | ||||||
Japan - 2.3% | ||||||||
Consumer Finance - 0.5% | ||||||||
Jaccs Co., Ltd. | 93,578 | 2,321,184 | ||||||
IT Services - 1.7% (d) | ||||||||
GMO Financial Gate, Inc. | 12,546 | 1,113,042 | ||||||
GMO Payment Gateway, Inc. | 113,869 | 7,828,346 | ||||||
Total IT Services | 8,941,388 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Mobile Payments ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Software - 0.1% | ||||||||
Intelligent Wave, Inc. | 120,819 | $ | 614,405 | |||||
Total Japan | 11,876,977 | |||||||
Netherlands - 4.3% | ||||||||
IT Services - 4.3% (d) | ||||||||
Adyen NV (a)(f) | 16,965 | 21,644,358 | ||||||
Puerto Rico - 1.3% | ||||||||
IT Services - 1.3% (d) | ||||||||
EVERTEC, Inc. | 215,517 | 6,756,458 | ||||||
Republic of Korea - 1.6% | ||||||||
IT Services - 1.6% (d) | ||||||||
Danal Co., Ltd. (a) | 252,239 | 1,013,751 | ||||||
Kakaopay Corp. (a) | 199,015 | 6,829,969 | ||||||
Total IT Services | 7,843,720 | |||||||
United Kingdom - 4.2% | ||||||||
IT Services - 4.2% (d) | ||||||||
Network International Holdings PLC (a)(f) | 2,530,972 | 8,562,610 | ||||||
PayPoint PLC | 188,991 | 1,266,102 | ||||||
Wise PLC - Class A (a) | 1,577,142 | 11,632,835 | ||||||
Total IT Services | 21,461,547 | |||||||
United States - 70.5% | ||||||||
Consumer Finance - 11.4% | ||||||||
American Express Co. (b) | 219,765 | 29,648,497 | ||||||
Bread Financial Holdings, Inc. | 186,866 | 5,876,936 | ||||||
Discover Financial Services | 173,975 | 15,817,807 | ||||||
Green Dot Corp. - Class A (a) | 340,241 | 6,457,774 | ||||||
Total Consumer Finance | 57,801,014 | |||||||
IT Services - 56.8% (d) | ||||||||
Affirm Holdings, Inc. (a)(b) | 391,984 | 7,353,620 | ||||||
Block, Inc. (a) | 331,056 | 18,204,769 | ||||||
Boku, Inc. (a)(f) | 1,227,809 | 1,528,558 | ||||||
Cantaloupe, Inc. (a) | 219,821 | 764,977 | ||||||
Euronet Worldwide, Inc. (a)(b) | 92,461 | 7,004,845 | ||||||
Evo Payments, Inc. - Class A (a) | 211,676 | 7,048,811 | ||||||
Fidelity National Information Services, Inc. | 315,772 | 23,862,890 | ||||||
Fiserv, Inc. (a) | 319,700 | 29,914,329 | ||||||
FleetCor Technologies, Inc. (a) | 60,410 | 10,642,430 | ||||||
Flywire Corp. (a)(b) | 309,786 | 7,112,687 | ||||||
Global Payments, Inc. | 162,914 | 17,602,858 | ||||||
I3 Verticals, Inc. - Class A (a) | 110,000 | 2,203,300 | ||||||
International Money Express, Inc. (a) | 113,096 | 2,577,458 | ||||||
Jack Henry & Associates, Inc. (b) | 62,125 | 11,323,524 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Mobile Payments ETF
Schedule of Investments
September 30, 2022 (Continued)
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Mobile Payments ETF
Schedule of Investments
September 30, 2022 (Continued)
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
PLC | Public Limited Company |
(a) | Non-income producing security. |
(b) | All or a portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the annualized seven-day yield at period end. |
(d) | As of September 30, 2022 the Fund had a significant portion of its assets in the IT Services Industry. |
(e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
(f) | Restricted security as defined in Rule 144(a) under the Securities Act of 1933. Resale to the public may require registration or may extend only to qualified institutional buyers. At September 30, 2022, the market value of these securities total $60,392,773, which represents 11.9% of total net assets. |
(g) | Value determined using significant unobservable inputs. The value of this security totals $0, which represents 0.0% of total net assets. Classified as Level 3 in the fair value hierarchy. |
(h) | Security has been deemed illiquid according to the Fund’s liquidity guidelines. The value of these securities total $81,122, which represents 0.0% of net assets. |
(i) | Amount is less than 0.05%. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2022
Principal Amount |
Value | |||||||
CORPORATE BONDS - 87.0% | ||||||||
Bermuda - 2.6% | ||||||||
Commercial and Industrial Machinery and Equipment Rental and Leasing - 2.6% | ||||||||
Triton Container International, Ltd. | ||||||||
1.150%, 06/07/2024 (a) | $ | 3,550,000 | $ | 3,326,580 | ||||
Canada - 0.8% | ||||||||
Banks - 0.8% | ||||||||
Canadian Imperial Bank of Commerce | ||||||||
2.761%, (SOFRIX + 0.420%), 10/18/2024 (b) | 1,000,000 | 982,583 | ||||||
Ireland - 1.4% | ||||||||
Capital Goods – 1.1% | ||||||||
AerCap Ireland Capital DAC / AerCap Global Aviation Trust | ||||||||
1.750%, 10/29/2024 | 1,500,000 | 1,366,176 | ||||||
Automotive - 0.3% | ||||||||
SMBC Aviation Capital Finance DAC | ||||||||
3.550%, 04/15/2025 (a) | 395,000 | 380,059 | ||||||
Total Ireland | 1,746,325 | |||||||
United Kingdom - 1.8% | ||||||||
Banks - 1.8% | ||||||||
Barclays PLC | ||||||||
4.302%, (3 Month LIBOR USD + 1.380%), 05/16/2024 (b) | 2,281,000 | 2,279,960 | ||||||
United States - 80.4% | ||||||||
Automotive - 6.3% | ||||||||
General Motors Financial Co., Inc. | ||||||||
3.047%, (SOFR + 0.760%), 03/08/2024 (b) | 2,244,000 | 2,213,264 | ||||||
2.153%, (SOFR + 0.620%), 10/15/2024 (b) | 1,000,000 | 970,454 | ||||||
Hyundai Capital America | ||||||||
1.250%, 09/18/2023 (a) | 2,564,000 | 2,467,224 | ||||||
Penske Truck Leasing Co. Lp / PTL Finance Corp. | ||||||||
3.450%, 07/01/2024 (a) | 2,200,000 | 2,118,724 | ||||||
7,769,666 | ||||||||
Banks – 18.9% | ||||||||
Bank of America Corp. | ||||||||
3.864%, (3 Month LIBOR USD + 0.940%), 07/23/2024 (b) | 1,194,000 | 1,178,306 | ||||||
3.458%, (3 Month LIBOR USD + 0.970%), 03/15/2025 (b) | 1,658,000 | 1,606,815 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2022 (Continued)
Principal Amount |
Value | |||||||
Citigroup, Inc. | ||||||||
3.352%, (3 Month LIBOR USD + 0.897%), 04/24/2025 (b) | $ | 2,557,000 | $ | 2,468,085 | ||||
0.981%, (SOFR + 0.669%), 05/01/2025 (b) | 2,000,000 | 1,854,898 | ||||||
Citizens Financial Group, Inc. | ||||||||
3.750%, 07/01/2024 | 500,000 | 483,195 | ||||||
Comerica Bank | ||||||||
4.000%, 07/27/2025 | 1,436,000 | 1,371,838 | ||||||
First Horizon Corp. | ||||||||
4.000%, 05/26/2025 | 2,660,000 | 2,568,217 | ||||||
The Huntington National Bank | ||||||||
4.008%, (SOFR + 1.205%), 05/16/2025 (b) | 600,000 | 588,186 | ||||||
JPMorgan Chase & Co. | ||||||||
0.653%, (TSFR3M + 0.600%), 09/16/2024 (b) | 1,000,000 | 954,237 | ||||||
3.845%, (SOFR + 0.980%), 06/07/2025 (b) | 2,500,000 | 2,431,196 | ||||||
KeyBank NA | ||||||||
4.150%, 08/08/2025 | 2,100,000 | 2,037,509 | ||||||
PNC Bank NA | ||||||||
3.875%, 04/10/2025 | 2,268,000 | 2,198,886 | ||||||
Truist Bank | ||||||||
3.689%, (3 Month LIBOR USD + 0.735%), 08/02/2024 (b) | 2,700,000 | 2,672,037 | ||||||
Webster Financial Corp. | ||||||||
4.375%, 02/15/2024 | 750,000 | 739,288 | ||||||
23,152,693 | ||||||||
Capital Goods – 0.8% | ||||||||
Air Lease Corp. | ||||||||
0.800%, 08/18/2024 | 1,040,000 | 948,407 | ||||||
Chemicals - 0.7% | ||||||||
The Sherwin-Williams Co. | ||||||||
4.050%, 08/08/2024 | 950,000 | 935,221 | ||||||
Communications Equipment - 0.5% | ||||||||
Motorola Solutions, Inc. | ||||||||
4.000%, 09/01/2024 | 580,000 | 569,146 | ||||||
Consumer Services - 0.8% | ||||||||
7-Eleven, Inc. | ||||||||
0.800%, 02/10/2024 (a) | 1,000,000 | 946,223 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2022 (Continued)
Principal Amount |
Value | |||||||
Diversified Financial Services - 6.4% | ||||||||
American Express Co. | ||||||||
3.950%, 08/01/2025 | $ | 1,700,000 | $ | 1,647,506 | ||||
BGC Partners, Inc. | ||||||||
5.375%, 07/24/2023 | 1,245,000 | 1,245,001 | ||||||
Goldman Sachs Group, Inc. | ||||||||
3.500%, 01/23/2025 | 1,000,000 | 962,089 | ||||||
Morgan Stanley | ||||||||
4.083%, (3 Month LIBOR USD + 1.220%), 05/08/2024 (b) | 2,242,000 | 2,243,844 | ||||||
3.620%, (SOFR + 1.160%), 04/17/2025 (b) | 1,000,000 | 971,200 | ||||||
0.790%, (SOFR + 0.525%), 05/30/2025 (b) | 997,000 | 918,467 | ||||||
7,988,107 | ||||||||
Diversified Telecommunication Services - 1.5% | ||||||||
T-Mobile USA, Inc. | ||||||||
3.500%, 04/15/2025 | 2,000,000 | 1,913,609 | ||||||
Food Products - 3.5% | ||||||||
General Mills, Inc. | ||||||||
3.750%, (3 Month LIBOR USD + 1.010%), 10/17/2023 (b) | 2,871,000 | 2,886,067 | ||||||
Hormel Foods Corp. | ||||||||
0.650%, 06/03/2024 | 1,536,000 | 1,437,765 | ||||||
4,323,832 | ||||||||
Health Care Equipment & Supplies - 1.1% | ||||||||
Zimmer Biomet Holdings, Inc. | ||||||||
1.450%, 11/22/2024 | 1,500,000 | 1,388,830 | ||||||
Insurance - 21.8% | ||||||||
Brighthouse Financial Global Funding | ||||||||
1.562%, (SOFR + 0.760%), 04/12/2024 (a)(b) | 3,693,000 | 3,659,245 | ||||||
Brown & Brown, Inc. | ||||||||
4.200%, 09/15/2024 | 3,453,000 | 3,388,109 | ||||||
CNO Global Funding | ||||||||
1.650%, 01/06/2025 (a) | 3,000,000 | 2,756,555 | ||||||
F&G Global Funding | ||||||||
0.900%, 09/20/2024 (a) | 2,700,000 | 2,459,609 | ||||||
Fairfax US, Inc. | ||||||||
4.875%, 08/13/2024 (a) | 745,000 | 730,167 | ||||||
Finial Holdings, Inc. | ||||||||
7.125%, 10/15/2023 | 1,415,000 | 1,450,367 | ||||||
Health Care Service Corp A Mutual Legal Reserve Corp. | ||||||||
1.500%, 06/01/2025 (a) | 2,000,000 | 1,821,355 | ||||||
Jackson Financial, Inc. | ||||||||
1.125%, 11/22/2023 (a) | 500,000 | 478,352 | ||||||
Jackson National Life Global Funding | ||||||||
3.875%, 06/11/2025 (a) | 718,000 | 689,387 | ||||||
John Hancock Life Insurance Co. | ||||||||
7.375%, 02/15/2024 (a) | 495,000 | 509,476 | ||||||
Liberty Mutual Insurance Co. | ||||||||
8.500%, 05/15/2025 (a) | 1,500,000 | 1,568,456 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2022 (Continued)
Principal Amount |
Value | |||||||
Metropolitan Life Insurance Co. | ||||||||
7.875%, 02/15/2024 (a) | $ | 1,695,000 | $ | 1,753,010 | ||||
Nationwide Mutual Insurance Co. | ||||||||
5.583%, (3 Month LIBOR USD + 2.290%), 12/15/2024 (a)(b)(c) | 3,000,000 | 3,000,381 | ||||||
Pacific Life Insurance Co. | ||||||||
7.900%, 12/30/2023 (a) | 1,700,000 | 1,753,388 | ||||||
Reliance Standard Life Global Funding II | ||||||||
2.500%, 10/30/2024 (a) | 1,000,000 | 944,594 | ||||||
26,962,451 | ||||||||
Multi-Utilities - 10.6% | ||||||||
AMEREN ILL Co. | ||||||||
3.250%, 03/01/2025 | 350,000 | 337,437 | ||||||
Atlantic City Electric Co. | ||||||||
3.375%, 09/01/2024 | 535,000 | 519,049 | ||||||
Baltimore Gas and Electric Co. | ||||||||
3.350%, 07/01/2023 | 870,000 | 863,480 | ||||||
CenterPoint Energy, Inc. | ||||||||
2.937%, (SOFRINDX + 0.650%), 05/13/2024 (b) | 2,473,000 | 2,439,260 | ||||||
CMS Energy Corp. | ||||||||
3.875%, 03/01/2024 | 1,570,000 | 1,541,271 | ||||||
DTE Energy Co. | ||||||||
1.050%, 06/01/2025 | 1,500,000 | 1,344,463 | ||||||
4.220%, 11/01/2025 | 1,000,000 | 981,680 | ||||||
PacifiCorp | ||||||||
3.350%, 07/01/2025 | 750,000 | 719,624 | ||||||
Potomac Electric Power Co. | ||||||||
3.600%, 03/15/2024 | 1,000,000 | 983,547 | ||||||
Public Service Co. of Colorado | ||||||||
2.900%, 05/15/2025 | 700,000 | 665,467 | ||||||
Public Service Electric and Gas Co. | ||||||||
3.050%, 11/15/2024 | 350,000 | 336,671 | ||||||
3.000%, 05/15/2025 | 460,000 | 438,865 | ||||||
WEC Energy Group, Inc. | ||||||||
5.000%, 09/27/2025 | 1,500,000 | 1,495,913 | ||||||
Wisconsin Electric Power Co. | ||||||||
3.100%, 06/01/2025 | 450,000 | 430,714 | ||||||
13,097,441 | ||||||||
Oil, Gas & Consumable Fuels - 3.6% | ||||||||
Kinder Morgan, Inc. | ||||||||
3.792%, (3 Month LIBOR USD + 1.280%), 01/15/2023 (b) | 2,588,000 | 2,590,466 | ||||||
Magellan Midstream Partners LP | ||||||||
3.200%, 03/15/2025 | 1,992,000 | 1,885,109 | ||||||
4,475,575 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2022 (Continued)
Principal Amount |
Value | |||||||
Professional Services - 0.7% | ||||||||
Equifax, Inc. | ||||||||
3.950%, 06/15/2023 | $ | 842,000 | $ | 837,906 | ||||
Semiconductors & Semiconductor Equipment - 0.6% | ||||||||
Analog Devices, Inc. | ||||||||
0.929%, (SOFR + 0.250%), 10/01/2024 (b) | 813,000 | 799,614 | ||||||
Retailing - 2.8% | ||||||||
Dollar General Corp. | ||||||||
4.250%, 09/20/2024 | 1,000,000 | 988,968 | ||||||
Genuine Parts Co. | ||||||||
1.750%, 02/01/2025 | 2,089,000 | 1,930,799 | ||||||
Ross Stores, Inc. | ||||||||
4.600%, 04/15/2025 | 500,000 | 495,839 | ||||||
3,415,606 | ||||||||
Total United States | 99,524,327 | |||||||
TOTAL CORPORATE BONDS (Cost $111,310,252) | 107,769,685 | |||||||
MUNICIPAL BONDS - 4.2% | ||||||||
United States – 4.2% | ||||||||
City of Moline IL | ||||||||
2.130%, 12/01/2022 | 100,000 | 99,668 | ||||||
City of Oakland CA | ||||||||
4.000%, 12/15/2022 | 700,000 | 700,371 | ||||||
Colorado Bridge Enterprise | ||||||||
0.923%, 12/31/2023 | 2,000,000 | 1,911,222 | ||||||
Homewood Educational Building Authority | ||||||||
2.000%, 12/01/2023 | 620,000 | 601,725 | ||||||
Indiana Finance Authority | ||||||||
0.955%, 03/01/2024 | 450,000 | 428,939 | ||||||
Iowa Student Loan Liquidity Corp. | ||||||||
3.586%, 12/01/2023 | 1,000,000 | 986,953 | ||||||
Kentucky Housing Corp. | ||||||||
0.800%, 01/01/2024 | 350,000 | 335,004 | ||||||
North Springs Improvement District | ||||||||
1.000%, 05/01/2023 | 215,000 | 210,989 | ||||||
TOTAL MUNICIPAL BONDS (Cost $5,451,371) | 5,274,871 | |||||||
U.S. GOVERNMENT AGENCY ISSUES - 4.4% | ||||||||
United States – 4.4% | ||||||||
Federal Home Loan Banks | ||||||||
4.000%, 08/28/2025 | 2,000,000 | 1,973,410 | ||||||
Federal Home Loan Mortgage Corp. | ||||||||
4.050%, 07/21/2025 | 1,800,000 | 1,775,864 | ||||||
Federal National Mortgage Association | ||||||||
4.125%, 08/28/2025 | 1,700,000 | 1,678,203 | ||||||
TOTAL U.S. GOVERNMENT AGENCY ISSUES (Cost $5,500,000) | 5,427,477 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
SHORT-TERM INVESTMENTS - 4.0% | ||||||||
Money Market Funds - 4.0% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (d) | 4,945,688 | $ | 4,945,688 | |||||
TOTAL MONEY MARKET FUNDS (Cost $4,945,688) | 4,945,688 | |||||||
Total Investments (Cost $127,207,311) - 99.6% | 123,417,721 | |||||||
Other Assets in Excess of Liabilities - 0.4% | 480,625 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 123,898,346 |
Percentages are stated as a percent of net assets.
PLC | Public Limited Company |
(a) | Restricted security as defined in Rule 144(a) under the Securities Act of 1933. Resale to the public may require registration or may extend only to qualified institutional buyers. At September 30, 2022, the market value of these securities total $30,794,433, which represents 24.9% of total net assets. |
(b) | Variable rate security based on a reference index and spread. The rate reported is the rate in effect as of September 30, 2022. |
(c) | Variable rate security. The coupon is based on an underlying pool of assets. The rate reported is the rate in effect as of September 30, 2022. |
(d) | The rate shown is the annualized seven-day yield at period end. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Treatments, Testing and Advancements ETF
Schedule of Investments
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 99.5% | ||||||||
Canada - 4.6% | ||||||||
Biotechnology - 0.8% (d) | ||||||||
Arbutus Biopharma Corp. (a)(b) | 44,250 | $ | 84,518 | |||||
VBI Vaccines, Inc. (a) | 76,210 | 53,789 | ||||||
XBiotech, Inc. (a) | 8,982 | 32,515 | ||||||
Total Biotechnology | 170,822 | |||||||
Life Sciences Tools & Services - 3.8% | ||||||||
AbCellera Biologics, Inc. (a) | 84,143 | 832,174 | ||||||
Total Canada | 1,002,996 | |||||||
Cayman Islands - 3.8% | ||||||||
Biotechnology - 3.8% (d) | ||||||||
I-Mab - ADR (a)(b) | 24,522 | 98,333 | ||||||
Zai Lab, Ltd. - ADR (a) | 21,353 | 730,273 | ||||||
Total Biotechnology | 828,606 | |||||||
France - 0.8% | ||||||||
Pharmaceuticals - 0.8% | ||||||||
Sanofi - ADR | 4,369 | 166,109 | ||||||
Germany - 6.2% | ||||||||
Biotechnology - 6.2% (d) | ||||||||
BioNTech SE - ADR (b) | 10,031 | 1,352,981 | ||||||
Japan - 0.8% | ||||||||
Pharmaceuticals - 0.8% | ||||||||
Takeda Pharmaceutical Co., Ltd. - ADR (b) | 12,846 | 166,613 | ||||||
Netherlands - 2.1% | ||||||||
Biotechnology - 2.1% (d) | ||||||||
CureVac NV (a)(b) | 55,320 | 435,922 | ||||||
InflaRx NV (a) | 13,044 | 34,436 | ||||||
Total Biotechnology | 470,358 | |||||||
United Kingdom - 4.3% | ||||||||
Biotechnology - 2.8% (d) | ||||||||
Immunocore Holdings PLC - ADR (a) | 12,944 | 607,591 | ||||||
Pharmaceuticals - 1.5% | ||||||||
AstraZeneca PLC - ADR (b) | 2,856 | 156,623 | ||||||
GSK PLC - ADR (b) | 5,570 | 163,925 | ||||||
Total Pharmaceuticals | 320,548 | |||||||
Total United Kingdom | 928,139 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Treatments, Testing and Advancements ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
United States - 76.9% | ||||||||
Biotechnology - 40.2% (d) | ||||||||
AbbVie, Inc. (b) | 1,275 | $ | 171,118 | |||||
Alnylam Pharmaceuticals, Inc. (a) | 7,018 | 1,404,722 | ||||||
Altimmune, Inc. (a)(b) | 14,467 | 184,744 | ||||||
Arcturus Therapeutics Holdings, Inc. (a)(b) | 7,843 | 116,233 | ||||||
Assembly Biosciences, Inc. (a) | 14,293 | 23,441 | ||||||
Atossa Therapeutics, Inc. (a) | 37,366 | 31,137 | ||||||
BioCryst Pharmaceuticals, Inc. (a) | 54,871 | 691,375 | ||||||
CEL-SCI Corp. (a)(b) | 12,797 | 39,543 | ||||||
Chimerix, Inc. (a) | 25,857 | 49,904 | ||||||
Cue Biopharma, Inc. (a) | 10,441 | 23,283 | ||||||
Dynavax Technologies Corp. (a)(b) | 37,322 | 389,642 | ||||||
Emergent BioSolutions, Inc. (a) | 14,714 | 308,847 | ||||||
Enanta Pharmaceuticals, Inc. (a) | 6,116 | 317,237 | ||||||
Enochian Biosciences, Inc. (a)(b) | 15,625 | 28,281 | ||||||
Gilead Sciences, Inc. | 2,718 | 167,673 | ||||||
GreenLight Biosciences Holdings PBC (a)(b) | 36,500 | 84,680 | ||||||
Gritstone bio, Inc. (a) | 21,544 | 55,368 | ||||||
HilleVax, Inc. (a) | 9,864 | 168,576 | ||||||
Hookipa Pharma, Inc. (a) | 16,143 | 21,632 | ||||||
iBio, Inc. (a) | 64,379 | 10,964 | ||||||
Icosavax, Inc. (a) | 11,770 | 37,193 | ||||||
ImmunityBio, Inc. (a)(b) | 118,127 | 587,091 | ||||||
Inovio Pharmaceuticals, Inc. (a) | 73,597 | 126,955 | ||||||
Invivyd, Inc. (a)(b) | 32,115 | 100,520 | ||||||
Moderna, Inc. (a) | 10,670 | 1,261,728 | ||||||
Novavax, Inc. (a)(b) | 23,081 | 420,074 | ||||||
Ocugen, Inc. (a)(b) | 63,907 | 113,754 | ||||||
Regeneron Pharmaceuticals, Inc. (a)(b) | 294 | 202,528 | ||||||
Silverback Therapeutics, Inc. (a) | 10,468 | 55,271 | ||||||
Sorrento Therapeutics, Inc. (a)(b) | 132,778 | 208,461 | ||||||
SQZ Biotechnologies Co. (a) | 8,631 | 19,679 | ||||||
Vaxart, Inc. (a)(b) | 37,331 | 81,382 | ||||||
Vaxcyte, Inc. (a) | 17,504 | 420,096 | ||||||
Vaxxinity, Inc. - Class A (a)(b) | 37,189 | 73,634 | ||||||
Vir Biotechnology, Inc. (a)(b) | 39,141 | 754,638 | ||||||
Total Biotechnology | 8,751,404 | |||||||
Health Care Equipment & Supplies - 8.6% | ||||||||
Abbott Laboratories | 1,684 | 162,944 | ||||||
Co-Diagnostics, Inc. (a) | 9,969 | 32,000 | ||||||
Cue Health, Inc. (a)(b) | 43,719 | 131,594 | ||||||
Hologic, Inc. (a)(b) | 2,580 | 166,462 | ||||||
Meridian Bioscience, Inc. (a) | 12,910 | 407,052 | ||||||
OraSure Technologies, Inc. (a) | 21,429 | 81,216 | ||||||
QuidelOrtho Corp. (a) | 12,397 | 886,138 | ||||||
Total Health Care Equipment & Supplies | 1,867,406 |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Treatments, Testing and Advancements ETF
Schedule of Investments
September 30, 2022 (Continued)
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Treatments, Testing and Advancements ETF
Schedule of Investments
September 30, 2022 (Continued)
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
PLC | Public Limited Company |
(a) | Non-income producing security. |
(b) | All or a portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the annualized seven-day yield at period end. |
(d) | As of September 30, 2022 the Fund had a significant portion of its assets in the Biotechnology Industry. |
(e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 2022
ETFMG Prime Cyber Security ETF |
ETFMG Prime Mobile Payments ETF |
ETFMG Sit Ultra Short ETF |
ETFMG Treatments, Testing and Advancements ETF |
|||||||||||||
ASSETS | ||||||||||||||||
Investments in unaffiliated securities, at value* | $ | 1,485,345,579 | $ | 552,322,444 | $ | 123,417,721 | $ | 26,661,173 | ||||||||
Investments in affiliated securities, at value* | 40,863,750 | 43,267,500 | — | 1,201,875 | ||||||||||||
Foreign currency* | — | 86,319 | — | — | ||||||||||||
Receivables: | ||||||||||||||||
Receivable for investments sold | 2,152,644 | 1,689,370 | — | — | ||||||||||||
Dividends and interest receivable | 1,200,506 | 1,597,587 | 849,472 | 9,373 | ||||||||||||
Securities lending income receivable | 105,115 | 49,429 | — | 15,088 | ||||||||||||
Total Assets | 1,529,667,594 | 599,012,649 | 124,267,193 | 27,887,509 | ||||||||||||
LIABILITIES | ||||||||||||||||
Collateral received for securities loaned (Note 7) | 96,313,548 | 91,456,962 | — | 6,110,959 | ||||||||||||
Payables: | ||||||||||||||||
Foreign currency payable to custodian, at value* | 33 | — | — | — | ||||||||||||
Payable for investments purchased | 1,084,657 | 916 | 337,848 | — | ||||||||||||
Management fees payable | 753,904 | 346,782 | 30,999 | 13,318 | ||||||||||||
Total Liabilities | 98,152,142 | 91,804,660 | 368,847 | 6,124,277 | ||||||||||||
Net Assets | $ | 1,431,515,452 | $ | 507,207,989 | $ | 123,898,346 | $ | 21,763,232 | ||||||||
NET ASSETS CONSIST OF: | ||||||||||||||||
Paid-in Capital | $ | 2,020,866,419 | $ | 963,674,226 | $ | 131,007,142 | $ | 50,416,908 | ||||||||
Total Distributable Earnings (Accumulated Losses) | (589,350,967 | ) | (456,466,237 | ) | (7,108,796 | ) | (28,653,676 | ) | ||||||||
Net Assets | $ | 1,431,515,452 | $ | 507,207,989 | $ | 123,898,346 | $ | 21,763,232 | ||||||||
*Identified Cost: | ||||||||||||||||
Investments in unaffiliated securities | $ | 1,767,486,056 | $ | 797,099,796 | $ | 127,207,311 | $ | 47,429,290 | ||||||||
Investments in affiliated securities | 42,334,152 | 45,006,517 | — | 1,243,975 | ||||||||||||
Foreign currency | 33 | 85,707 | — | — | ||||||||||||
Shares Outstanding^ | 33,000,000 | 13,400,000 | 2,575,000 | 1,050,000 | ||||||||||||
Net Asset Value, Offering and Redemption Price per Share | $ | 43.38 | $ | 37.85 | $ | 48.12 | $ | 20.73 |
^ No par value, unlimited number of shares authorized
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
For the Year ended September 30, 2022
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Cyber Security ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment income | $ | 2,217,325 | $ | 7,093,741 | ||||
Net realized gain on investments and In-Kind Redemptions | 11,269,378 | 330,529,386 | ||||||
Net change in unrealized appreciation (depreciation) of | ||||||||
investments and foreign currency and foreign currency translation | (627,655,319 | ) | 153,820,198 | |||||
Net increase (decrease) in net assets resulting from operations | (614,168,616 | ) | 491,443,325 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | (2,222,505 | ) | (6,619,000 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares | (259,776,610 | ) | 318,934,925 | |||||
Transaction Fees (See Note 1) | 35,598 | 74,347 | ||||||
Net increase (decrease) in net assets from capital share transactions | (259,741,012 | ) | 319,009,272 | |||||
Total increase (decrease) in net assets | (876,132,133 | ) | 803,833,597 | |||||
NET ASSETS | ||||||||
Beginning of Year | 2,307,647,585 | 1,503,813,988 | ||||||
End of Year | $ | 1,431,515,452 | $ | 2,307,647,585 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 15,400,000 | $ | 864,143,480 | 16,750,000 | $ | 994,736,015 | ||||||||||
Transaction Fees (See Note 1) | — | 35,598 | — | 74,347 | ||||||||||||
Shares Redeemed | (20,250,000 | ) | (1,123,920,090 | ) | (11,200,000 | ) | (675,801,090 | ) | ||||||||
Net Transactions in Fund Shares | (4,850,000 | ) | $ | (259,741,012 | ) | 5,550,000 | $ | 319,009,272 | ||||||||
Beginning Shares | 37,850,000 | 32,300,000 | ||||||||||||||
Ending Shares | 33,000,000 | 37,850,000 |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Mobile Payments ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment loss | $ | (719,090 | ) | $ | (2,268,082 | ) | ||
Net realized gain (loss) on investments and In-Kind Redemptions | (120,294,623 | ) | 143,616,233 | |||||
Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | (379,332,326 | ) | 59,723,122 | |||||
Net increase (decrease) in net assets resulting from operations | (500,346,039 | ) | 201,071,273 | |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares | (186,127,525 | ) | 194,384,200 | |||||
Transaction Fees (See Note 1) | 44,420 | 39,220 | ||||||
Net increase (decrease) in net assets from capital share transactions | (186,083,105 | ) | 194,423,420 | |||||
Total increase (decrease) in net assets | (686,429,144 | ) | 395,494,693 | |||||
NET ASSETS | ||||||||
Beginning of Year | 1,193,637,133 | 798,142,440 | ||||||
End of Year | $ | 507,207,989 | $ | 1,193,637,133 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 2,100,000 | $ | 114,795,455 | 8,700,000 | $ | 593,606,155 | ||||||||||
Transaction Fees (See Note 1) | — | 44,420 | — | 39,220 | ||||||||||||
Shares Redeemed | (6,300,000 | ) | (300,922,980 | ) | (5,800,000 | ) | (399,221,955 | ) | ||||||||
Net Transactions in Fund Shares | (4,200,000 | ) | $ | (186,083,105 | ) | 2,900,000 | $ | 194,423,420 | ||||||||
Beginning Shares | 17,600,000 | 14,700,000 | ||||||||||||||
Ending Shares | 13,400,000 | 17,600,000 |
The accompanying notes are an integral part of these financial statements.
ETFMG Sit Ultra Short ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment income | $ | 2,230,300 | $ | 1,093,399 | ||||
Net realized gain (loss) on investments and In-Kind Redemptions | (2,255,726 | ) | 74,759 | |||||
Net change in unrealized appreciation (depreciation) of | ||||||||
investments and foreign currency and foreign currency translation | (4,305,127 | ) | (112,246 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (4,330,553 | ) | 1,055,912 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | (2,064,413 | ) | (1,070,997 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares | (112,259,140 | ) | 136,797,377 | |||||
Net increase (decrease) in net assets | (118,654,106 | ) | 136,782,292 | |||||
NET ASSETS | ||||||||
Beginning of Year | 242,552,452 | 105,770,160 | ||||||
End of Year | $ | 123,898,346 | $ | 242,552,452 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | — | $ | — | 3,050,000 | $ | 151,723,497 | ||||||||||
Shares Redeemed | (2,300,000 | ) | (112,259,140 | ) | (300,000 | ) | (14,926,120 | ) | ||||||||
Net Transactions in Fund Shares | (2,300,000 | ) | $ | (112,259,140 | ) | 2,750,000 | $ | 136,797,377 | ||||||||
Beginning Shares | 4,875,000 | 2,125,000 | ||||||||||||||
Ending Shares | 2,575,000 | 4,875,000 |
The accompanying notes are an integral part of these financial statements.
ETFMG Treatments, Testing and Advancements ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September |
Year Ended September |
|||||||
30, 2022 | 30, 2021 | |||||||
OPERATIONS | ||||||||
Net investment income | $ | 137,898 | $ | 578,226 | ||||
Net realized gain (loss) on investments and In-Kind Redemptions | (5,036,064 | ) | 13,807,775 | |||||
Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | (22,089,191 | ) | 6,476,857 | |||||
Net increase (decrease) in net assets resulting from operations | (26,987,357 | ) | 20,862,858 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | (119,444 | ) | (647,750 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net decrease in net assets derived from net change in outstanding shares | (14,610,560 | ) | (10,764,405 | ) | ||||
Net increase (decrease) in net assets | (41,717,361 | ) | 9,450,703 | |||||
NET ASSETS | ||||||||
Beginning of Year | 63,480,593 | 54,029,890 | ||||||
End of Year | $ | 21,763,232 | $ | 63,480,593 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 100,000 | $ | 2,739,590 | 900,000 | $ | 35,594,570 | ||||||||||
Shares Redeemed | (600,000 | ) | (17,350,150 | ) | (1,300,000 | ) | (46,358,975 | ) | ||||||||
Net Transactions in Fund Shares | (500,000 | ) | $ | (14,610,560 | ) | (400,000 | ) | $ | (10,764,405 | ) | ||||||
Beginning Shares | 1,550,000 | 1,950,000 | ||||||||||||||
Ending Shares | 1,050,000 | 1,550,000 |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Cyber Security ETF
For a capital share outstanding throughout the year
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, |
||||||||||||||||
Net Asset Value, Beginning Year | $ | 60.97 | $ | 46.56 | $ | 37.46 | $ | 40.08 | $ | 30.11 | ||||||||||
Income (Loss) from Investment Operations: | ||||||||||||||||||||
Net investment income 1 | 0.06 | 0.20 | 0.64 | 0.07 | 0.03 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | (17.59 | ) | 14.39 | 9.10 | (2.64 | ) | 9.94 | |||||||||||||
Total from investment operations | (17.53 | ) | 14.59 | 9.74 | (2.57 | ) | 9.97 | |||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | (0.06 | ) | (0.18 | ) | (0.64 | ) | (0.05 | ) | (0.00 | )2 | ||||||||||
Total distributions | (0.06 | ) | (0.18 | ) | (0.64 | ) | (0.05 | ) | (0.00 | )2 | ||||||||||
Net asset value, end year | $ | 43.38 | $ | 60.97 | $ | 46.56 | $ | 37.46 | $ | 40.08 | ||||||||||
Total Return | (28.77 | )% | 31.34 | % | 26.75 | % | (6.42 | )% | 33.16 | % | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end of year (000’s) | $ | 1,431,515 | $ | 2,307,648 | $ | 1,503,814 | $ | 1,427,200 | $ | 1,835,861 | ||||||||||
Gross Expenses to Average Net Assets | 0.60 | % | 0.60 | % | 0.60 | % | 0.60 | % | 0.60 | % | ||||||||||
Net Investment Income to Average Net Assets | 0.11 | % | 0.35 | % | 1.50 | % | 0.19 | % | 0.07 | % | ||||||||||
Portfolio Turnover Rate | 51 | % | 34 | % | 33 | % | 36 | % | 41 | % |
1 | Calculated based on average shares outstanding during the year. |
2 | Per share amount is less than $0.01. |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Mobile Payments ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, 2018 |
||||||||||||||||
Net Asset Value, Beginning Year | $ | 67.82 | $ | 54.30 | $ | 46.60 | $ | 42.86 | $ | 32.57 | ||||||||||
Income (Loss) from Investment Operations: | ||||||||||||||||||||
Net investment income (loss) 1 | (0.04 | ) | (0.13 | ) | (0.04 | ) | 0.03 | 0.07 | ||||||||||||
Net realized and unrealized gain (loss) on investments | (29.93 | ) | 13.65 | 7.75 | 3.93 | 10.22 | ||||||||||||||
Total from investment operations | (29.97 | ) | 13.52 | 7.71 | 3.96 | 10.29 | ||||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | — | — | (0.02 | ) | (0.05 | ) | (0.01 | ) | ||||||||||||
Net realized gains | — | — | — | (0.18 | ) | — | ||||||||||||||
Total distributions | — | — | (0.02 | ) | (0.23 | ) | (0.01 | ) | ||||||||||||
Capital Share Transactions: | ||||||||||||||||||||
Transaction fees added to paid-in capital | — | — | 0.01 | 0.01 | 0.01 | |||||||||||||||
Net asset value, end year | $ | 37.85 | $ | 67.82 | $ | 54.30 | $ | 46.60 | $ | 42.86 | ||||||||||
Total Return | (44.18 | )% | 24.91 | % | 16.56 | % | 9.49 | % | 31.62 | % | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end year (000’s) | $ | 507,208 | $ | 1,193,637 | $ | 798,142 | $ | 743,198 | $ | 522,874 | ||||||||||
Gross Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||
Net Investment Income (Loss) to Average Net Assets | (0.09 | )% | (0.20 | )% | (0.08 | )% | 0.06 | % | 0.16 | % | ||||||||||
Portfolio Turnover Rate | 35 | % | 27 | % | 19 | % | 28 | % | 16 | % |
1 | Calculated based on average shares outstanding during the year. |
The accompanying notes are an integral part of these financial statements.
ETFMG Sit Ultra Short ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year/period
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Period Ended September 30, 20201 |
||||||||||
Net Asset Value, Beginning Year/Period | $ | 49.75 | $ | 49.77 | $ | 50.00 | ||||||
Income (Loss) from Investment Operations: | ||||||||||||
Net investment income 2 | 0.51 | 0.39 | 0.86 | |||||||||
Net realized and unrealized loss on investments | (1.63 | ) | (0.02 | ) | (0.27 | ) | ||||||
Total from investment operations | (1.12 | ) | 0.37 | 0.59 | ||||||||
Less Distributions: | ||||||||||||
Distributions from net investment income | (0.51 | ) | (0.39 | ) | (0.82 | ) | ||||||
Total distributions | (0.51 | ) | (0.39 | ) | (0.82 | ) | ||||||
Net asset at end of year/period | $ | 48.12 | $ | 49.75 | $ | 49.77 | ||||||
Total Return | (2.29 | )% | 0.75 | %5 | 1.19 | %3 | ||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets at end of year/period (000’s) | $ | 123,898 | $ | 242,552 | $ | 105,770 | ||||||
Gross Expenses to Average Net Assets | 0.30 | % | 0.30 | % | 0.30 | %4 | ||||||
Net Investment Income to Average Net Assets | 1.03 | % | 0.77 | % | 1.78 | %4 | ||||||
Portfolio Turnover Rate | 70 | % | 55 | % | 132 | %3 |
1 | Commencement of operations on October 8, 2019. |
2 | Calculated based on average shares outstanding during the year/period. |
3 | Not annualized. |
4 | Annualized. |
5 | The returns reflect the actual performance for the period and do not include the impact of trades executed on the last business day of the period that were recorded on the first business day of the next period. |
The accompanying notes are an integral part of these financial statements.
ETFMG Treatments, Testing and Advancements ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year/period
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Period Ended September 30, 20201 |
||||||||||
Net Asset Value, Beginning Year/Period | $ | 40.96 | $ | 27.71 | $ | 25.00 | ||||||
Income (Loss) from Investment Operations: | ||||||||||||
Net investment income 2 | 0.11 | 0.36 | 0.02 | |||||||||
Net realized and unrealized gain (loss) on investments | (20.23 | ) | 13.28 | 2.69 | ||||||||
Total from investment operations | (20.12 | ) | 13.64 | 2.71 | ||||||||
Less Distributions: | ||||||||||||
Distributions from net investment income | (0.11 | ) | (0.39 | ) | — | |||||||
Total distributions | (0.11 | ) | (0.39 | ) | — | |||||||
Net asset at end of year/period | $ | 20.73 | $ | 40.96 | $ | 27.71 | ||||||
Total Return | (49.14 | )% | 49.43 | %5 | 10.82 | %3 | ||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets at end of year/period (000’s) | $ | 21,763 | $ | 63,481 | $ | 54,030 | ||||||
Gross Expenses to Average Net Assets | 0.68 | % | 0.68 | % | 0.68 | %4 | ||||||
Net Investment Income to Average Net Assets | 0.37 | % | 0.98 | % | 0.25 | %4 | ||||||
Portfolio Turnover Rate | 30 | % | 39 | % | 41 | %3 |
1 | Commencement of operations on June 17, 2020. |
2 | Calculated based on average shares outstanding during the year/period. |
3 | Not annualized. |
4 | Annualized. |
5 | The returns reflect the actual performance for the period and do not include the impact of trades executed on the last business day of the period that were recorded on the first business day of the next period. |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
September 30, 2022
NOTE 1 – ORGANIZATION
ETFMG Prime Cyber Security ETF (“HACK”), ETFMG Prime Mobile Payments ETF (“IPAY”), ETFMG Sit Ultra Short ETF (“VALT”), and ETFMG Treatments, Testing and Advancements ETF (“GERM”) (each a “Fund”, or collectively the “Funds”) are series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Funds’ shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”).
The following table is a summary of the Strategy Commencement Date and Strategy of the Funds:
Fund Ticker |
Strategy Date |
Strategy |
ETFMG Prime Cyber Security ETF |
8/1/2017 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield of the Prime Cyber Defense Index (“Prime Cyber Index”). |
ETFMG Prime Mobile Payments ETF |
8/1/2017 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Mobile Payments Index (“Prime Mobile Index”). |
ETFMG Sit Ultra Short ETF |
10/8/2019 | Seeks to achieve its investment objective by investing in a diversified portfolio of high-quality short-term U.S. dollar denominated domestic and foreign debt securities and other instruments. |
ETFMG Treatments, Testing and Advancements ETF |
6/17/2020 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Treatments, Testing and Advancements Index. |
The Funds each currently offer one class of shares, which have no front end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of each Fund have equal rights and privileges.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. Market prices for the shares may be different from their net asset value (“NAV”). Each Fund issues and redeems shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the shares directly from a Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services - Investment Companies.
New Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in ASU 2020-04 provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of LIBOR and other interbank-offered based reference rates as of the end of 2021. ASU 2020-04 is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, of applying this ASU.
The Funds may invest in certain other investment companies (underlying funds). For more information about the underlying Fund’s operations and policies, please refer to those Fund’s semiannual and annual reports, which are filed with the SEC.
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Debt obligations are generally valued on the basis of valuations provided by third party pricing services, as derived from such services’ pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and ask prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security.
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by ETF Managers Group, LLC (the “Adviser”), using procedures adopted by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2022, the ETFMG Prime Mobile Payments ETF held one security that was fair valued by the Adviser.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As described above, the Funds utilize various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access.
Level 2 Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability and would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following is a summary of the inputs used to value the Funds’ net assets as of September 30, 2022:
ETFMG Prime Cyber Security ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 1,420,606,959 | $ | — | $ | — | $ | 1,420,606,959 | ||||||||
Short-Term Investments | 10,742,283 | — | — | 10,742,283 | ||||||||||||
ETFMG Sit Ultra Short ETF** | 40,863,750 | — | — | 40,863,750 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 53,996,337 | ||||||||||||
Total Investments in Securities | $ | 1,472,212,992 | $ | — | $ | — | $ | 1,526,209,329 |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
ETFMG Prime Mobile Payments ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 499,201,688 | $ | — | $ | — | (1) | $ | 499,201,688 | |||||||
Short-Term Investments | 6,670,311 | — | — | 6,670,311 | ||||||||||||
ETFMG Sit Ultra Short ETF** | 43,267,500 | — | — | 43,267,500 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 46,450,445 | ||||||||||||
Total Investments in Securities | $ | 549,139,499 | $ | — | $ | — | $ | 595,589,944 |
ETFMG Sit Ultra Short ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Fixed Income | ||||||||||||||||
Corporate Bonds | $ | — | $ | 107,769,685 | $ | — | $ | 107,769,685 | ||||||||
Municipal Bonds | — | 5,274,871 | — | 5,274,871 | ||||||||||||
U.S. Government Agency Issues | — | 5,427,477 | — | 5,427,477 | ||||||||||||
Short-Term Investments | 4,945,688 | — | — | 4,945,688 | ||||||||||||
Total Investments in Securities | $ | 4,945,688 | $ | 118,472,033 | $ | — | $ | 123,417,721 |
ETFMG Treatments, Testing and Advancements ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 21,651,438 | $ | — | $ | — | $ | 21,651,438 | ||||||||
Short-Term Investments | 142,751 | — | — | 142,751 | ||||||||||||
ETFMG Sit Ultra Short ETF** | 1,201,875 | — | — | 1,201,875 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 4,866,984 | ||||||||||||
Total Investments in Securities | $ | 22,996,064 | $ | — | $ | — | $ | 27,863,048 |
(1) | Includes security valued at $0 with a cost of $2,636,627. This security transfered from Level 1 to Level 3 during the year. |
^ | See Schedule of Investments for classifications by country and industry. |
* | Certain investments that are measured at fair value used the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedules of Investments. |
** | Investment was purchased with collateral. |
B. | Federal Income Taxes. The Funds have each elected to be taxed as a “regulated investment company” and intend to distribute substantially all taxable income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of each Fund’s next taxable year.
Each Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Each Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2022 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
As of September 30, 2022, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for state purposes, generally a range of three to four years from the date of filing), as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Funds may be subject to income, withholding or other taxes imposed by foreign countries. |
D. | Foreign Currency Translations and Transactions. The Funds may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income are generally declared and paid by each of the Funds on a quarterly basis. Distributions to shareholders from realized gains on securities for each Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
G. | Share Valuation. The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. For Authorized Participants, the offering and redemption price per share for the Funds are equal to the Funds’ respective net asset value per share. |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
H. | Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in the Funds may involve certain risks, as discussed in the Funds’ prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a Fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Funds, other than VALT, are not actively managed (“Index Funds”). Therefore, those Funds follow the securities included in its respective index during upturns as well as downturns. Because of their indexing strategies, the Index Funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Index Funds’ expenses, the Index Funds’ performance may be below that of their respective index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that a Fund’s or an index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect lobal, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility. exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
LIBOR is used extensively in the U.S. and globally as a “benchmark” or “reference rate” for various commercial and financial contracts, including corporate bonds. Instruments in which VALT invests may pay interest at floating rates based on LIBOR or may be subject to interest caps or floors based on LIBOR. The industry currently anticipates the conversion of all LIBOR based instruments to SOFR based instruments in June 2023 or sooner.
Since 2017, the United Kingdom’s Financial Conduct Authority has been working towards the cessation of LIBOR at the end of December 2021. In November 2020, though, the administrator of the U.S. Dollar LIBOR benchmarks, the ICE Benchmark Administration, extended the retirement date for most U.S. Dollar LIBOR rates until June 2023. Regulators and industry working groups have suggested numerous alternative reference rates to LIBOR. Leading alternatives include Sonia in the United Kingdom, €STR in the European Union, Tonar in Japan, and in the U.S., the New York Fed has been working to develop the Secured Overnight Financing Rate (SOFR). Global consensus is still coalescing around the transition to a new reference rate and the process for amending existing contracts. Abandonment of or modifications to LIBOR could have adverse impacts on newly issued financial instruments and existing financial instruments which reference LIBOR. There also remains uncertainty and risk regarding the willingness and ability of issuers to include enhanced provisions in new and existing contracts or instruments. The transition away from LIBOR may lead to increased volatility and illiquidity in markets that are tied to LIBOR, reduced values of LIBOR-related investments, and reduced effectiveness of hedging strategies, adversely affecting VALT’s performance or NAV. In addition, the alternative reference rate may be an ineffective substitute resulting in prolonged adverse market conditions for VALT.
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Funds.
A complete description of the principal risks is included in each Fund’s prospectus under the heading “Principal Investment Risks.”
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
The Adviser serves as the investment advisor to the Funds. Pursuant to an Investment Advisory
Agreement (“Advisory Agreement”) between the Trust, on behalf of the Funds, and the Adviser, the Adviser provides investment advice to the Funds and oversees the day-to-day operations of the Funds, subject to the direction and control of the
Board and the officers of the Trust. Under the Advisory Agreement, the Adviser is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Funds
to operate.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Under the Investment Advisory Agreement, the Adviser has overall responsibility for the general management and administration of the Funds and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Funds to operate. The Funds unitary fees are accrued daily and paid monthly. The Adviser bears the costs of all advisory and non-advisory services required to operate the Funds, in exchange for a single unitary fee at the following annual rates:
ETFMG Prime Cyber Security ETF | 0.60 | % | ||
ETFMG Prime Mobile Payments ETF | 0.75 | % | ||
ETFMG Sit Ultra Short ETF | 0.30 | % | ||
ETFMG Treatments, Testing and Advancements ETF | 0.68 | % |
Under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Funds, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Adviser has entered into an agreement with its affiliate ETFMG Financial, LLC to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds. Level ETF Ventures, LLC (“Level”) serves as the index provider for HACK, IPAY, and GERM. Level is not affiliated with the Trust or the Adviser.
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Funds. The Adviser compensates the Administrator for these services under an administration agreement between the two parties.
The Adviser pays each independent Trustee a quarterly fee for service to the Funds. Each Trustee is also reimbursed by the Adviser for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Funds have each adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to each Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. During the year ended September 30, 2022, the Funds did not incur any 12b-1 expenses.
NOTE 6 – PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, during the year ended September 30, 2022:
Purchases | Sales | |||||||
ETFMG Prime Cyber Security ETF | $ | 1,023,215,890 | $ | 1,089,697,920 | ||||
ETFMG Prime Mobile Payments ETF | 310,047,274 | 320,800,136 | ||||||
ETFMG Sit Ultra Short ETF | 161,767,963 | 266,814,149 | ||||||
ETFMG Treatments, Testing and Advancements ETF | 11,850,890 | 12,143,383 |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the year ended September 30, 2022:
Purchases In- Kind |
Sales In- Kind |
|||||||
ETFMG Prime Cyber Security ETF | $ | 845,628,934 | $ | 1,091,784,423 | ||||
ETFMG Prime Mobile Payments ETF | 112,395,435 | 290,560,923 | ||||||
ETFMG Sit Ultra Short ETF | — | — | ||||||
ETFMG Treatments, Testing and Advancements ETF | 2,711,339 | 16,889,805 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Funds’ determination of taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations during the year ended September 30, 2022.
NOTE 7 — SECURITIES LENDING
The Funds, except for VALT, may lend up to 33 1/3% of the value of the securities in their portfolios to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (the “Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Funds receive compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Funds continue to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss on the fair value of securities loaned that may occur during the term of the loan will be for the account of the Funds. The Funds have the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations, either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Adviser; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Adviser. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Funds could also experience delays in recovering their securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As of the year ended September 30, 2022 the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
Fund | Values of Securities on Loan |
Fund Collateral Received* | ||||||
ETFMG Prime Cyber Security ETF | $ | 94,200,661 | $ | 96,313,548 | ||||
ETFMG Prime Mobile Payments ETF | 88,843,550 | 91,456,962 | ||||||
ETFMG Treatments, Testing and Advancements ETF | 5,906,073 | 6,110,959 |
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, a money market fund with an overnight and continuous maturity, and ETFMG Sit Ultra Short ETF as shown on the Schedule of Investments.
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2022 were as follows:
Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
ETFMG Prime | ||||||||||||||||
Cyber Security ETF | $ | 1,868,170,998 | $ | 78,049,699 | $ | (420,011,368 | ) | $ | (341,961,669 | ) | ||||||
ETFMG Prime Mobile Payments ETF | 862,963,244 | 13,634,713 | (281,008,013 | ) | (267,373,300 | ) | ||||||||||
ETFMG Sit Ultra Short ETF | 127,216,834 | 600 | (3,799,713 | ) | (3,799,113 | ) | ||||||||||
ETFMG Treatments, Testing and Advancements ETF | 49,044,863 | 1,429,094 | (22,610,909 | ) | (21,181,815 | ) |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the components of distributable earnings (loss) on a tax basis were as follows:
Undistributed Ordinary Income |
Undistributed Long-Term Gain |
Total Distributable Earnings |
Other Accumulated Loss |
Total Accumulated Gain (Loss) |
||||||||||||||||
ETFMG Prime | ||||||||||||||||||||
Cyber Security ETF | $ | 165,733 | $ | — | $ | 165,733 | $ | (247,555,031 | ) | $ | (589,350,967 | ) | ||||||||
ETFMG Prime Mobile Payments ETF | — | — | — | (189,092,937 | ) | (456,466,237 | ) | |||||||||||||
ETFMG Sit Ultra Short ETF | 282,026 | — | 282,026 | (3,591,709 | ) | (7,108,796 | ) | |||||||||||||
ETFMG Treatments, Testing and Advancements ETF | 22,261 | — | 22,261 | (7,494,122 | ) | (28,653,676 | ) |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As of September 30, 2022, the Funds had accumulated capital loss carryovers of:
Capital Loss Carryforward ST |
Capital Loss Carryforward LT |
Expires | |||||||||
ETFMG Prime | |||||||||||
Cyber Security ETF | $ | (151,862,041 | ) | $ | (95,696,949 | ) | Indefinite | ||||
ETFMG Prime Mobile Payments ETF | (79,451,251 | ) | (109,196,748 | ) | Indefinite | ||||||
ETFMG Sit Ultra Short ETF | (2,899,813 | ) | (691,896 | ) | Indefinite | ||||||
ETFMG Treatments, Testing and Advancements ETF | (4,705,635 | ) | (2,788,487 | ) | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ending September 30, 2022.
Late Year Ordinary Loss |
Post- October Capital Loss |
|||||||
ETFMG Prime Cyber Security ETF | $ | — | $ | — | ||||
ETFMG Prime Mobile Payments ETF | (440,991 | ) | — | |||||
ETFMG Sit Ultra Short ETF | — | — | ||||||
ETFMG Treatments, Testing and Advancements ETF | — | — |
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2022, the following table shows the reclassifications made:
Total Distributable Earnings/(Loss) |
Paid-In Capital |
|||||||
ETFMG Prime Cyber Security ETF | $ | (77,873,262 | ) | $ | 77,873,262 | |||
ETFMG Prime Mobile Payments ETF | (4,428,195 | ) | 4,428,195 | |||||
ETFMG Sit Ultra Short ETF | — | — | ||||||
ETFMG Treatments, Testing and Advancements ETF | (117,353 | ) | 117,353 |
The tax charter of distributions paid during the year ended September 30, 2022, and the year ended September 30, 2021 were as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
From Ordinary Income |
From Capital Gains |
From Ordinary Income |
From Capital Gains |
|||||||||||||
ETFMG Prime Cyber Security ETF | $ | 2,222,505 | $ | — | $ | 6,619,000 | $ | — | ||||||||
ETFMG Prime Mobile Payments ETF | — | — | — | — | ||||||||||||
ETFMG Sit Ultra Short ETF | 2,064,413 | — | 1,070,997 | — | ||||||||||||
ETFMG Treatments, Testing and Advancements ETF | 119,444 | — | 647,750 | — |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 9 – INVESTMENTS IN AFFILIATES
ETFMG Prime Cyber Security ETF
ETFMG Prime Cyber Security ETF owned the following company during the year ended September 30, 2022. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the year ended September 30, 2022. Transactions during the period in this security was as follows:
Security Name | Value at September 30, 2021 |
Purchases | Sales | Realized Gain (Loss)(1) |
Change in Unrealized Appreciation (Depreciation) | Dividend Income |
Value at September 30, 2022 | Ending Shares |
||||||||||||||||||||||||
ETFMG Sit Ultra Short ETF * | $ | 87,071,250 | $ | — | $ | (43,830,585 | ) | $ | (1,269,522 | ) | $ | (1,107,393 | ) | $ | — | $ | 40,863,750 | 850,000 |
ETFMG Prime Mobile Payments ETF
ETFMG Prime Mobile Payments ETF owned the following company during the year ended September 30, 2022. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the year ended September 30, 2022. Transactions during the period in this security was as follows:
Security Name | Value at September 30, 2021 |
Purchases | Sales | Realized Gain (Loss)(1) |
Change in Unrealized Appreciation (Depreciation) | Dividend Income |
Value at September 30, 2022 | Ending Shares |
||||||||||||||||||||||||
ETFMG Sit Ultra Short ETF * | $ | 44,779,500 | $ | — | $ | — | $ | — | $ | (1,512,000 | ) | $ | — | $ | 43,267,500 | 900,000 |
ETFMG Treatments, Testing and Advancements ETF
ETFMG Treatments, Testing and Advancements ETF owned the following company during the year ended September 30, 2022. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the year ended September 30, 2022. Transactions during the period in this security was as follows:
Security Name | Value at September 30, 2021 |
Purchases | Sales | Realized Gain (Loss)(1) |
Change in Unrealized Appreciation (Depreciation) | Dividend Income |
Value at September 30, 2022 | Ending Shares |
||||||||||||||||||||||||
ETFMG Sit Ultra Short ETF * | $ | 1,243,875 | $ | — | $ | — | $ | — | $ | (42,000 | ) | $ | — | $ | 1,201,875 | 25,000 |
*Affiliate as of September 30, 2022.
1 Realized Losses include transactions in affiliated investments and affiliated in-kind redemptions.
As of September 30, 2022, 98.06% of outstanding shares of VALT were owned by affiliates.
NOTE 10 – LEGAL MATTERS
The Trust, the Adviser, and certain officers and affiliated persons of the Adviser (together with the Adviser, the “Adviser Defendants”) were named as defendants in an action filed December 21, 2021, in the Superior Court of New Jersey, Union County, captioned PureShares, LLC, d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. UNN-C-152-21 (the “NJ Action”). The NJ Action asserted breach of contract and other tort claims and sought damages in unspecified amounts and injunctive relief. On May 25, 2022, the court in the NJ Action dismissed with prejudice all claims asserted against the Trust, as well as all contract claims and all except one tort claim asserted against the Adviser Defendants.
As of September 30, 2022, there were no adjustments made to the accompanying financial statements based on the above legal matters.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 11 – SUBSEQUENT EVENTS
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.
ETFMG™ ETFs
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of ETFMG Prime Cyber Security ETF, ETFMG Prime Mobile Payments ETF, ETFMG Sit Ultra Short ETF and ETFMG Treatments, Testing and Advancements ETF:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments of ETFMG Prime Cyber Security ETF, ETFMG Prime Mobile Payments ETF, ETFMG Sit Ultra Short ETF and ETFMG Treatments, Testing and Advancements ETF (collectively the “Funds”) (certain of the Funds comprising ETF Managers Trust) as of September 30, 2022, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the periods indicated therein, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of September 30, 2022, and the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor of one or more series of the Trust since 2013.
New York, New York
November 29, 2022
ETFMG™ ETFs
EXPENSE EXAMPLES
Six Months Ended September 30, 2022 (Unaudited)
As a shareholder of the Funds you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 invested for the period of time as indicated in the table below.
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
Fund Name | Beginning Account Value April 1, 2022 |
Ending Account Value September 30, 2022 |
Expenses Paid During the Period^ |
Annualized Expense Ratio During the Period April 1, 2022 to September 30, 2022 |
||||||||||||
ETFMG Prime Cyber Security ETF | ||||||||||||||||
Actual | 1,000.00 | $ | 739.80 | $ | 2.62 | 0.60 | % | |||||||||
Hypothetical (5% annual) | 1,000.00 | 1,022.06 | 3.04 | 0.60 | % | |||||||||||
ETFMG Prime Mobile Payments ETF | ||||||||||||||||
Actual | 1,000.00 | 724.50 | 3.24 | 0.75 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,021.31 | 3.80 | 0.75 | % | |||||||||||
ETFMG Sit Ultra Short ETF | ||||||||||||||||
Actual | 1,000.00 | 988.80 | 1.50 | 0.30 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,023.56 | 1.52 | 0.30 | % | |||||||||||
ETFMG Treatments, Testing and Advancements ETF | ||||||||||||||||
Actual | 1,000.00 | 761.90 | 3.00 | 0.68 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,021.66 | 3.45 | 0.68 | % |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/365 (to reflect the one-half year period).
ETFMG™ ETFs
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
ETFMG™ ETFs
Board of Trustees (Continued)
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
Terry Loebs (1963) | Trustee (since 2014); Lead Independent Trustee (since 2020) |
Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). |
17 | None |
Eric Wiegel (1960) | Trustee (since 2020) |
Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018). |
17 | None |
ETFMG™ ETFs
SUPPLEMENTARY INFORMATION
September 30, 2022 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2022, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Fund Name | Qualified Dividend Income |
ETFMG Prime Cyber Security ETF | 100.00% |
ETFMG Prime Mobile Payments ETF | 0.00% |
ETFMG Sit Ultra Short ETF | 0.00% |
ETFMG Treatments, Testing and Advancements | 99.29% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2022 was as follows:
Fund Name | Dividends Received Deduction |
ETFMG Prime Cyber Security ETF | 100.00% |
ETFMG Prime Mobile Payments ETF | 0.00% |
ETFMG Sit Ultra Short ETF | 0.00% |
ETFMG Treatments, Testing and Advancements | 91.44% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for each Fund were as follows:
Fund Name | Short-Term Capital Gain |
ETFMG Prime Cyber Security ETF | 0.00% |
ETFMG Prime Mobile Payments ETF | 0.00% |
ETFMG Sit Ultra Short ETF | 0.00% |
ETFMG Treatments, Testing and Advancements | 0.00% |
ETFMG™ ETFs
SUPPLEMENTARY INFORMATION
September 30, 2022 (Unaudited) (Continued)
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the Securities and Exchange Commission (“SEC”) on Part F of Form N-PORT. The Funds’ Part F of Form N-PORT is available on the website of the SEC at www.sec.gov and the Funds’ website at www.etfmgfunds.com. Each Fund’s portfolio holdings are posted on their website at www.etfmgfunds.com daily.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at (877) 756-7873, by accessing the SEC’s website at www.sec.gov, or by accessing the Funds’ website at www.etfmgfunds.com.
Information regarding how the Funds voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at (877) 756-7873 or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
ETFMG™ ETFs
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) | Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P. |
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S. Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
ETFMG Travel Tech ETF
AWAY
ETFMG 2x Daily Travel Tech ETF
AWYX
Annual Report
September 30, 2022
The funds are series of ETF Managers Trust.
ETFMG TM ETFs
TABLE OF CONTENTS
September 30, 2022
ETFMG TM ETFs
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these ETFs. The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
Market Overview
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and, in many cases, unprecedented volatility and severe losses due to the global pandemic caused by COVID-19. Some sectors of the economy and individual issuers have experienced particularly large losses because of these disruptions. In response to these disruptions, the U.S. government and the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, contributing to inflationary pressure and expectations for inflation. Further, Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict have increased volatility and uncertainty in the financial markets and adversely affect regional and global economies. The full extent and duration of these conditions and the totality of repercussions are impossible to predict but could continue to result in significant market disruptions and may continue to negatively affect global supply chains, inflation and global growth. These and related events have impacted the ETFs’ performance, among other factors, and the value of an investment in the ETFs. We encourage you to talk with your financial advisor and visit etfmg.com for further insight about investing in today’s markets.
Performance Overview
During the fiscal-year ended September 30, 2022, the S&P 500 Information Technology Sector Index, a broad measure of US listed technology companies, returned -21.14%. During the same period, the S&P Global 1200 Information Technology Sector Index, a broad measure of global technology companies, returned -25.16%. Below is a performance overview for each fund for the same period.
ETFMG Travel Tech ETF (AWAY)
The ETFMG Travel Tech ETF (“AWAY”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Travel Technology Index NTR (the “Index”).
Over the fiscal period, the total return for AWAY was -44.08%, while the total return the for the Index was -43.83%. The best performers in AWAY, on the basis of contribution to return were, Makemytrip Ltd, Adventure Inc, First Am Gov Oblig-X, Cielo Sa, and Japanese Yen, while the worst performers were Lyft Inc-A, Didi Global Inc, Siteminder Ltd, Swvl Holdings Corp, and Sabre Corp.
During the reporting period, AWAY saw an average approximate allocation to the Consumer Discretionary sector of 64.79%, the IT Services sector of 16.16%, and to the Industrials sector or 11.16%. The portfolio holdings of AWAY were exposed predominately to the United States at 31.83%, China at 12.99%, and Japan at 11.8%.
ETFMG 2x Daily Travel Tech ETF (AWYX)
Operational Review
The discussion below relates to the performance of the ETFMG 2x Daily Travel Tech ETF (“AWYX” or the “ETF”) fiscal period from October 1, 2021 to September 30, 2022. AWYX is leveraged and seeks daily investment results, before fees and expenses, of 200% the performance of the Index.
As stated above, AWYX seeks daily investment results. It does not seek to track a multiple of the Index for periods of longer than one day and the performance of AWYX over longer periods may not correlate to the Index performance. AWYX should not be held by investors for long periods and it should only be used as a short-term trading vehicle. This product is not suitable for all investors, but rather investors who seek substantial risk in order to more aggressively seek returns. Such products should be utilized only by sophisticated investors who understand the risks associated with the use of leverage, the consequences of seeking daily leveraged investment results (e.g., significant losses associated with negative market moves in a leveraged product) and intend to actively monitor and manage their investments
AWYX attempts to provide investment results that correlate to 200% of the return of the Index, meaning AWYX attempts to move in the same direction as the Index. In seeking to achieve the daily investment results of AWYX, ETF Managers Group LLC (the “Adviser”) relies upon quantitative analysis to generate orders resulting in repositioning the ETF’s investments in accordance with its daily investment objective. Using this approach, the Adviser determines the type, quantity and mix of investment positions that it believes in combination should produce daily returns consistent with the investment objective of AWYX. As a consequence, if AWYX is performing as designed, the return of the Index will dictate the return for the ETF. AWYX pursues its investment objective regardless of market conditions and does not take defensive positions. AWYX has an articulated goal which requires the ETF to seek economic exposure significantly in excess of its net assets. To meet its objectives, AWYX invests in some combination of financial instruments, including derivatives. AWYX invests significantly in derivatives, including swap agreements. The Adviser uses these types of investments to produce economically “leveraged” investment results. Leveraging allows the Adviser to generate a greater positive or negative return than what would be generated on the invested capital without leverage, thus changing small market movements into larger changes in the value of the investments of AWYX.
AWYX may use certain investment techniques, including investments in derivatives, which are generally considered aggressive. Investments in derivatives in general are subject to market risks that may cause their prices to fluctuate dramatically over time. Additionally, use of such instruments may increase the volatility of AWYX. The use of derivatives will expose AWYX to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives, such as counterparty risk. The use of derivatives may result in larger losses or smaller gains than otherwise would be the case.
Because AWYX seeks daily investment results of the Index, a comparison of the return of the ETF to the Index does not provide an indication of whether the ETF has met its investment objective. To determine if AWYX has met its daily investment goals, the Adviser performs quantitative analysis seeking to determine the expected performance of the ETF as compared to Index. The quantitative analysis includes predictive models as well as stress-testing and back-testing.
Factors Affecting Performance of AWYX:
Leverage – AWYX seeks daily investment results (before fees and expenses) of 200% of the performance of the Index. The use of leverage magnifies an ETF’s gains or losses and increases the investment’s risk and volatility.
Index Performance – The daily performance of Index, and the factors and market conditions implicitly affecting the Index, are the primary factors driving the performance of AWYX. Given the daily goals, the daily Index returns are most important. The market conditions that affected the Index during the past year are described in the Performance Overview section.
Volatility and Compounding – The goal of AWYX is to provide the specified multiple of the daily return of the Index. Over periods longer than a single day, AWYX should not be expected to provide the multiple of the return of the underlying index. Due to the effects of compounding, a universal mathematical concept that applies to all investments, returns of AWYX over longer periods, are greater or less than the ETF’s daily stated goal. Periods of high volatility that lack a clear trend hurt the performance of AWYX while trending, low volatility markets enhance the ETF’s performance.
Cost of Financing – In order to attain leveraged or inverse leveraged exposure, AWYX receives OBFR plus or minus a spread as applied to the borrowed portion of the ETF’s exposure. The spread varies by counterparty to AWYX and is a function of market demand, hedging costs, access to balance sheet, borrow volatility, current counterparty exposure and administrative costs associated with the swap counterparty. An increase in interest rates which effects the cost of financing will further impact the performance and ability of AWYX to track the Index.
Fees, Expenses, and Transaction Costs – Fees and expenses are listed in the AWYX prospectus and may be higher than many traditional index funds’ fees, which cause a greater negative impact on ETF performance. Transactions costs are not included in the expense ratio of AWYX. Transaction costs can be higher due to the AWYX’s use of derivatives, shorting securities, frequent creation and redemption activity, or trading securities that are comparatively less liquid.
Swap Agreements:
During the reporting period, AWYX invested in swap agreements in order to gain the desired exposure to the Index. These derivatives generally tracked the performance of AWAY and the AWYX was generally negatively impacted from financing rates associated with their use. AWYX entered into swap agreements with counterparties that the Adviser determined to be significant global financial institutions.
If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in AWYX may decline. AWYX seeks to mitigate this risk by generally requiring counterparties to post collateral for its benefit, marked to market daily, in an amount approximately equal to the amount the counterparty owed AWYX, subject to certain minimum thresholds.
Performance Review
The following information pertains to the fiscal period, October 1, 2021 to September 30, 2022. AWYX seeks to provide daily investment results, before fees and expenses, that correspond to two times (2x) the return of the Index for a single day, not for any other period. Over the reporting period, the Index had a total return of -43.83% and volatility of 31.70%. Given the daily investment objectives of AWYX and the path dependency of returns for longer periods, the return of the Index for the reporting period alone should not generate expectations of AWYX performance for the same period. AWYX returned -73.20% for the reporting period and had volatility of 72.60%. For the reporting period AWYX had an average daily volume of 785 shares and an average daily statistical correlation of 95.5% to the return of the Index.
We thank you for your interest in our ETFs. You can find further details about AWAY and AWYX by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
ETFMG TM ETFs
Growth of $10,000 (Unaudited)
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
Since Inception (2/12/2020) |
Value of $10,000 (9/30/2022) |
|||||||||
ETFMG Travel Tech ETF (NAV) | -44.08 | % | -15.86 | % | $ | 6,347 | ||||||
ETFMG Travel Tech ETF (Market) | -44.42 | % | -16.02 | % | $ | 6,314 | ||||||
S&P 500 Index | -15.47 | % | 3.94 | % | $ | 11,071 | ||||||
Prime Travel Technology Index GTR | -43.82 | % | -15.88 | % | $ | 6,343 | ||||||
Prime Travel Technology Index NTR | -43.83 | % | -15.90 | % | $ | 6,340 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on February 12, 2020, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG TM ETFs
ETFMG Travel Tech ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security |
% of Total Investments |
|||
1 | Trip.com Group, Ltd. - ADR | 4.16% | ||
2 | Airbnb, Inc. - Class A | 4.09% | ||
3 | Expedia Group, Inc. | 4.08% | ||
4 | Uber Technologies, Inc. | 4.03% | ||
5 | Booking Holdings, Inc. | 3.93% | ||
6 | Tongcheng Travel Holdings, Ltd. | 3.81% | ||
7 | Trainline PLC | 3.71% | ||
8 | Amadeus IT Group SA | 3.69% | ||
9 | TripAdvisor, Inc. | 3.69% | ||
10 | MakeMyTrip, Ltd. | 3.65% |
Top Ten Holdings 38.84% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG TM ETFs
ETFMG 2x Daily Travel Tech ETF
Growth of $10,000 (Unaudited)
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
Since Inception (6/15/2021) |
Value of $10,000 (9/30/2022) |
|||||||||
ETFMG 2x Daily Travel Tech ETF (NAV) | -73.20 | % | -69.30 | % | $ | 2,172 | ||||||
ETFMG 2x Daily Travel Tech ETF (Market) | -72.57 | % | -69.10 | % | $ | 2,190 | ||||||
S&P 500 Index | -15.47 | % | -10.95 | % | $ | 8,607 | ||||||
Prime Travel Technology Index GTR | -43.82 | % | -39.92 | % | $ | 5,175 | ||||||
Prime Travel Technology Index NTR | -43.83 | % | -39.92 | % | $ | 5,174 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on June 15, 2021, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG TM ETFs
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
AWAY
The ETFMG Travel Tech ETF (the “Fund” or the “Travel Tech ETF”) seeks investment results that correspond generally to the price and yield, before fund fees and expenses, of the Prime Travel Technology Index (the “Index”).
Companies in the technology field, including companies in the computers, telecommunications and electronics industries, face intense competition, which may have an adverse effect on profit margins. Technology companies may have limited product lines, markets, financial resources or personnel. The products of technology companies may face obsolescence due to rapid technological developments and frequent new product introduction, and such companies may face unpredictable changes in growth rates, competition for the services of qualified personnel and competition from foreign competitors with lower production costs. Companies in the technology sector are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
The Fund is distributed by ETFMG Financial, which is not affiliated with Prime Indexes.
The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.
ETFMG TM ETFs
AWYX
Companies in the technology field, including companies in the computers, telecommunications and electronics industries, face intense competition, which may have an adverse effect on profit margins. Technology companies may have limited product lines, markets, financial resources or personnel. The products of technology companies may face obsolescence due to rapid technological developments and frequent new product introduction, and such companies may face unpredictable changes in growth rates, competition for the services of qualified personnel and competition from foreign competitors with lower production costs. Companies in the technology sector are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies.
Investing in an ETFMG 2x Daily Leveraged ETF may be more volatile than investing in broadly diversified funds. The use of leverage by an ETF increases the risk to the ETF. The ETFMG 2x Daily Leveraged ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leveraged, or daily inverse leveraged, investment results and intend to actively monitor and manage their investment.
The use of derivatives such as swaps are subject to additional risks that may cause prices to fluctuate over time and include the effects of compounding, market volatility, leverage risk, aggressive investment techniques risk, counterparty risk, and intra-day investment risk. Please see the summary and full prospectuses for a more complete description of these and other risks of investing in the Fund.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
The Fund is a recently organized, diversified management investment company with limited operating history. ETF Managers Group LLC is the investment advisor to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.
ETFMG TM ETFs
As of September 30, 2022 (Unaudited)
ETFMG Travel Tech |
ETFMG 2x Daily Travel Tech |
|||||||
As a percent of Net Assets: | ||||||||
Australia | 10.8 | % |
— |
% | ||||
Brazil | 2.1 | — | ||||||
Cayman Islands | 9.1 | — | ||||||
China | 3.9 | — | ||||||
Japan | 11.4 | — | ||||||
Mauritius | 4.1 | — | ||||||
Netherlands | 4.1 | — | ||||||
Republic of Korea | 4.0 | — | ||||||
Spain | 7.6 | — | ||||||
United Kingdom | 7.1 | — | ||||||
United States | 31.6 | — | ||||||
Virgin Islands | 3.3 | — | ||||||
Short-Term and other Net Assets (Liabilities) | 0.9 | 100.0 | ||||||
100.0 | % | 100.0 | % |
ETFMG TM ETFs
ETFMG Travel Tech ETF
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 99.1% | ||||||||
Australia - 10.8% | ||||||||
Hotels, Restaurants & Leisure - 7.3% (d) | ||||||||
Corporate Travel Management, Ltd. | 502,269 | $ | 5,378,183 | |||||
Webjet, Ltd. (a) | 1,754,245 | 5,341,226 | ||||||
Total Hotels, Restaurants & Leisure | 10,719,409 | |||||||
Software - 3.5% | ||||||||
SiteMinder, Ltd. (a) | 2,601,248 | 5,141,431 | ||||||
Total Australia | 15,860,840 | |||||||
Brazil - 2.1% | ||||||||
Hotels, Restaurants & Leisure - 2.1% (d) | ||||||||
CVC Brasil Operadora e Agencia de Viagens SA (a) | 2,668,387 | 3,121,325 | ||||||
Cayman Islands - 9.1% | ||||||||
Hotels, Restaurants & Leisure - 9.1% (d) | ||||||||
Tongcheng Travel Holdings, Ltd. (a) | 3,230,233 | 6,337,300 | ||||||
Trip.com Group, Ltd. - ADR (a)(b) | 253,791 | 6,931,033 | ||||||
Total Hotels, Restaurants & Leisure | 13,268,333 | |||||||
China - 3.9% | ||||||||
IT Services - 3.9% | ||||||||
TravelSky Technology, Ltd. | 3,755,358 | 5,750,499 | ||||||
Japan - 11.4% | ||||||||
Hotels, Restaurants & Leisure - 9.8% (d) | ||||||||
Adventure, Inc. (b) | 72,430 | 6,045,425 | ||||||
Airtrip Corp. (b) | 213,915 | 4,210,902 | ||||||
Open Door, Inc. (a) | 301,851 | 4,183,743 | ||||||
Total Hotels, Restaurants & Leisure | 14,440,070 | |||||||
Internet & Direct Marketing Retail - 1.6% | ||||||||
Temairazu, Inc. | 62,572 | 2,265,441 | ||||||
Total Japan | 16,705,511 | |||||||
Mauritius - 4.1% | ||||||||
Hotels, Restaurants & Leisure - 4.1% (d) | ||||||||
MakeMyTrip, Ltd. (a)(b) | 197,731 | 6,070,342 | ||||||
Netherlands - 4.1% | ||||||||
Hotels, Restaurants & Leisure - 1.4% (d) | ||||||||
Lastminute.com NV (a) | 112,527 | 2,041,384 | ||||||
Interactive Media & Services - 2.7% | ||||||||
Trivago NV - ADR (a) | 3,433,686 | 3,983,076 | ||||||
Total Netherlands | 6,024,460 |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
ETFMG Travel Tech ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Republic of Korea - 4.0% | ||||||||
Hotels, Restaurants & Leisure - 4.0% (d) | ||||||||
Hana Tour Service, Inc. (a) | 155,770 | $ | 5,868,458 | |||||
Spain - 7.6% | ||||||||
Hotels, Restaurants & Leisure - 3.4% (d) | ||||||||
eDreams ODIEGO SA (a) | 1,223,018 | 4,926,304 | ||||||
IT Services - 4.2% | ||||||||
Amadeus IT Group SA (a) | 130,845 | 6,143,699 | ||||||
Total Spain | 11,070,003 | |||||||
United Kingdom - 7.1% | ||||||||
Hotels, Restaurants & Leisure - 5.5% (d) | ||||||||
On the Beach Group PLC (a)(f) | 1,594,965 | 1,795,097 | ||||||
Trainline PLC (a)(f) | 1,754,468 | 6,184,381 | ||||||
Total Hotels, Restaurants & Leisure | 7,979,478 | |||||||
Software - 1.6% | ||||||||
accesso Technology Group PLC (a) | 396,216 | 2,397,770 | ||||||
Total United Kingdom | 10,377,248 | |||||||
United States - 31.6% | ||||||||
Airlines - 1.9% | ||||||||
Blade Air Mobility, Inc. - Class A (a)(b) | 684,511 | 2,758,579 | ||||||
Hotels, Restaurants & Leisure - 13.7% (d) | ||||||||
Airbnb, Inc. - Class A (a)(b) | 64,899 | 6,816,991 | ||||||
Booking Holdings, Inc. (a) | 3,987 | 6,551,478 | ||||||
Expedia Group, Inc. (a)(b) | 72,559 | 6,798,053 | ||||||
Total Hotels, Restaurants & Leisure | 20,166,522 | |||||||
Interactive Media & Services - 4.2% | ||||||||
TripAdvisor, Inc. (a)(b) | 278,234 | 6,143,406 | ||||||
IT Services - 3.2% | ||||||||
Sabre Corp. (a)(b) | 919,083 | 4,733,277 | ||||||
Road & Rail - 8.6% | ||||||||
Lyft, Inc. - Class A (a)(b) | 446,937 | 5,886,160 | ||||||
Uber Technologies, Inc. (a) | 253,488 | 6,717,433 | ||||||
Total Road & Rail | 12,603,593 | |||||||
Total United States | 46,405,377 | |||||||
Virgin Islands (UK) - 3.3% | ||||||||
Hotels, Restaurants & Leisure - 2.6% (d) | ||||||||
Despegar.com Corp. (a) | 682,657 | 3,891,145 | ||||||
Road & Rail - 0.7% | ||||||||
Swvl Holdings Corp. (a)(b) | 1,138,179 | 957,436 | ||||||
Total Virgin Islands (UK) | 4,848,581 | |||||||
TOTAL COMMON STOCKS (Cost $253,312,232) | 145,370,977 |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
ETFMG Travel Tech ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 13.5% | ||||||||
ETFMG Sit Ultra Short ETF (e) | 25,000 | $ | 1,201,875 | |||||
Mount Vernon Liquid Assets Portfolio, LLC, 3.18% (c) | 18,634,059 | 18,634,059 | ||||||
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $19,877,521) | 19,835,934 | |||||||
SHORT-TERM INVESTMENTS - 0.9% | ||||||||
Money Market Funds - 0.9% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (c) | 1,325,364 | 1,325,364 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $1,325,364) | 1,325,364 | |||||||
Total Investments (Cost $274,515,117) - 113.5% | 166,532,275 | |||||||
Liabilities in Excess of Other Assets - (13.5)% | (19,813,965 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 146,718,310 |
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
PLC Public Limited Company
(a) | Non-income producing security. |
(b) | This security or a portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the annualized seven-day yield at period end. |
(d) | As of September 30, 2022, the Fund had a significant portion of its assets in the Hotels, Restaurants & Leisure Industry. |
(e) | Affiliated Security. Please refer to Note 9 of the Notes to Financial Statements. |
(f) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. This security may be resold in transitions exempt from registration to qualified institutional investors. At September 30, 2022, the market value of these securities total $7,979,478, which represents 5.4% of total net assets. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
ETFMG 2x Daily Travel Tech ETF
Schedule of Investments
September 30, 2022
Shares | Value | |||||||
SHORT-TERM INVESTMENTS - 4.3% | ||||||||
Money Market Funds - 4.3% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (a) | 10,377 | $ | 10,377 | |||||
TOTAL SHORT-TERM INVESTMENTS (Cost $10,377) | 10,377 | |||||||
Total Investments (Cost $10,377) - 4.3% | 10,377 | |||||||
Other Assets in Excess of Liabilities - 95.7% | 228,519 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 238,896 |
Percentages are stated as a percent of net assets.
(a) | The rate shown is the annualized seven-day yield at period end. |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
ETFMG 2x Daily Travel Tech ETF
Schedule of Total Return Swaps
September 30, 2022
Reference Entity |
Fund Pays/Receives Reference Entity |
Counterparty | Payment Frequency |
Financing Rate |
Upfront |
Notional Amount |
Unrealized |
|||||||||||||
ETFMG Travel Tech ETF Swap | Receives | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index - 1.25% | $ | — | $ | 465,447 | $ | — |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 2022
ETFMG Travel Tech ETF |
ETFMG 2x Daily Travel Tech ETF |
|||||||
ASSETS | ||||||||
Investments in unaffiliated securities, at value* | $ | 165,330,400 | $ | 10,377 | ||||
Investments in affiliated securities, at value* | 1,201,875 | — | ||||||
Deposits at Broker for total return swap contracts | — | 304,614 | ||||||
Receivables: | ||||||||
Dividends and interest receivable | 81,791 | 19 | ||||||
Securities lending income receivable | 88,471 | — | ||||||
Total assets | 166,702,537 | 315,010 | ||||||
LIABILITIES | ||||||||
Collateral received for securities loaned (Note 7) | 19,877,521 | — | ||||||
Payable for open swap contracts | — | 75,881 | ||||||
Payables: | ||||||||
Management fees payable | 106,706 | 233 | ||||||
Total liabilities | 19,984,227 | 76,114 | ||||||
Net Assets | $ | 146,718,310 | $ | 238,896 | ||||
NET ASSETS CONSIST OF: | ||||||||
Paid-in Capital | $ | 328,090,288 | $ | 407,449 | ||||
Total Distributable Earnings (Accumulated Losses) | (181,371,978 | ) | (168,553 | ) | ||||
Net Assets | $ | 146,718,310 | $ | 238,896 | ||||
* Identified Cost: | ||||||||
Investments in unaffiliated securities | $ | 273,271,654 | $ | 10,377 | ||||
Investments in affiliated securities | 1,243,463 | — | ||||||
Shares Outstanding^ | 9,250,000 | 110,000 | ||||||
Net Asset Value, Offering and Redemption Price per Share | $ | 15.86 | $ | 2.17 |
^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
For the Year Ended September 30, 2022
ETFMG Travel Tech ETF |
ETFMG 2x Daily ETFMG Travel Tech ETF |
|||||||
INVESTMENT INCOME | ||||||||
Income: | ||||||||
Interest | $ | 16,752 | $ | 117 | ||||
Securities lending income | 726,511 | — | ||||||
Total Investment Income | 743,263 | 117 | ||||||
Expenses: | ||||||||
Management fees | 1,917,412 | 4,710 | ||||||
Dividend and interest expense | 19,773 | — | ||||||
Total Expenses | 1,937,185 | 4,710 | ||||||
Net Investment Loss | (1,193,922 | ) | (4,593 | ) | ||||
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||
Net Realized Gain (Loss) on: | ||||||||
Unaffiliated Investments | (60,771,443 | ) | — | |||||
In-Kind redemptions | (5,403,805 | ) | — | |||||
Foreign currency and foreign currency translation | (186,618 | ) | — | |||||
Total return swap contracts | — | (603,656 | ) | |||||
Net Realized Loss on Investments and In-Kind redemptions | (66,361,866 | ) | (603,656 | ) | ||||
Net Change in Unrealized Appreciation (Depreciation) of: | ||||||||
Unaffiliated Investments | (84,904,880 | ) | — | |||||
Affiliated Investments | (42,000 | ) | — | |||||
Foreign currency and foreign currency translation | (1,136 | ) | — | |||||
Net Change in Unrealized Appreciation (Depreciation) of Investments | (84,948,016 | ) | — | |||||
Net Realized and Unrealized Loss on Investments | (151,309,882 | ) | (603,656 | ) | ||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (152,503,804 | ) | $ | (608,249 | ) |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
ETFMG Travel Tech ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment loss | $ | (1,193,922 | ) | $ | (941,304 | ) | ||
Net realized gain (loss) on investments and in-kind redemptions | (66,361,866 | ) | 6,330,015 | |||||
Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | (84,948,016 | ) | (22,656,862 | ) | ||||
Net decrease in net assets resulting from operations | (152,503,804 | ) | (17,268,151 | ) | ||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | — | (24,500 | ) | |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived | ||||||||
from net change in outstanding shares | (22,901,445 | ) | 323,905,900 | 1 | ||||
Transaction Fees (See Note 1) | 166,376 | 243,915 | ||||||
Net increase (decrease) in net assets from capital share transactions | (22,735,069 | ) | 324,149,815 | |||||
Total increase (decrease) in net assets | (175,238,873 | ) | 306,857,164 | |||||
NET ASSETS | ||||||||
Beginning of Year | 321,957,183 | 15,100,019 | ||||||
End of Year | $ | 146,718,310 | $ | 321,957,183 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 4,800,000 | $ | 123,600,780 | 16,450,000 | $ | 496,261,225 | ||||||||||
Transaction Fees (See Note 1) | — | 166,376 | — | 243,915 | ||||||||||||
Shares Redeemed | (6,900,000 | ) | (146,502,225 | ) | (5,900,000 | ) | (172,355,325 | ) | ||||||||
Net Transactions in Fund Shares | (2,100,000 | ) | $ | (22,735,069 | ) | 10,550,000 | $ | 324,149,815 | ||||||||
Beginning Shares | 11,350,000 | 800,000 | ||||||||||||||
Ending Shares | 9,250,000 | 11,350,000 |
1 | Includes reimbursement of $1,545 due to net asset value error. |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
ETFMG 2x Daily Travel Tech ETF
STATEMENT OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Period Ended September 30, 20211 |
|||||||
OPERATIONS | ||||||||
Net investment loss | $ | (4,593 | ) | $ | (1,959 | ) | ||
Net realized loss on swap contracts | (603,656 | ) | (225,319 | ) | ||||
Net decrease in net assets resulting from operations | (608,249 | ) | (227,278 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets from capital share transactions | 36,627 | 1,037,796 | ||||||
Total increase (decrease) in net assets | (571,622 | ) | 810,518 | |||||
NET ASSETS | ||||||||
Beginning of Year/Period | 810,518 | — | ||||||
End of Year/Period | $ | 238,896 | $ | 810,518 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Period Ended September 30, 20211 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 10,000 | $ | 36,627 | 120,000 | $ | 1,181,474 | ||||||||||
Shares Redeemed | — | — | (20,000 | ) | (143,678 | ) | ||||||||||
Net Transactions in Fund Shares | 10,000 | $ | 36,627 | 100,000 | $ | 1,037,796 | ||||||||||
Beginning Shares | 100,000 | — | ||||||||||||||
Ending Shares | 110,000 | 100,000 |
1 | The Fund commenced operations on June 15, 2021. |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
ETFMG Travel Tech ETF
For a capital share outstanding throughout the year/period
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Period Ended September 30, 20201 |
||||||||||
Net Asset Value, Beginning Year/Period | $ | 28.37 | $ | 18.88 | $ | 25.00 | ||||||
Income (Loss) from Investment Operations: | ||||||||||||
Net investment loss2 | (0.10 | ) | (0.13 | ) | (0.02 | ) | ||||||
Net realized and unrealized gain (loss) on investments | (12.42 | ) | 9.60 | (6.12 | ) | |||||||
Total from investment operations | (12.52 | ) | 9.47 | (6.14 | ) | |||||||
Less Distributions: | ||||||||||||
Distributions from net investment income | — | (0.01 | ) | — | ||||||||
Total distributions | — | (0.01 | ) | — | ||||||||
Capital Shares Transactions: | ||||||||||||
Transaction fees added to paid-in capital | 0.01 | 0.03 | 0.02 | |||||||||
Net asset value, end year/period | $ | 15.86 | $ | 28.37 | $ | 18.88 | ||||||
Total Return | (44.08 | )% | 50.35 | % | (24.50 | )%3 | ||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets at end year/period (000’s) | $ | 146,718 | $ | 321,957 | $ | 15,100 | ||||||
Expenses to Average Net Assets | 0.76 | %5 | 0.75 | % | 0.75 | %4 | ||||||
Net Investment Income (Loss) to Average | ||||||||||||
Net Assets | (0.47 | )% | (0.43 | )% | 0.30 | %4 | ||||||
Portfolio Turnover Rate | 40 | % | 57 | % | 49 | %3 |
1 | Commencement of operations on February 12, 2020. |
2 | Calculated based on average shares outstanding during the year/period. |
3 | Not annualized. |
4 | Annualized. |
5 | Includes 0.01% of dividend and interest expense. |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
ETFMG 2x Daily Travel Tech ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year/period
Year Ended September 30, 2022 |
Period Ended September 30, 20211 |
|||||||
Net Asset Value, Beginning Year/Period | $ | 8.11 | $ | 10.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment loss 2 | (0.04 | ) | (0.02 | ) | ||||
Net realized and unrealized gain (loss) on investments | (5.90 | ) | (1.87 | ) | ||||
Total from investment operations | (5.94 | ) | (1.89 | ) | ||||
Net asset value, end year/period | $ | 2.17 | $ | 8.11 | ||||
Total Return | (73.20 | )% | (18.95 | )%3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of year/period (000’s) | $ | 239 | $ | 811 | ||||
Gross Expenses to Average Net Assets | 0.95 | % | 0.95 | %4 | ||||
Net Investment Income (Loss) to Average Net Assets | (0.93 | )% | (0.80 | )%4 | ||||
Portfolio Turnover Rate | 0 | % | 0 | %3 |
1 | The Fund commenced operations on June 15, 2021. |
2 | Calculated based on average shares outstanding during the year/period. |
3 | Not annualized. |
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
September 30, 2022
NOTE 1 – ORGANIZATION
ETFMG Travel Tech ETF (“AWAY”) and ETFMG 2x Daily Travel Tech ETF (“AWYX”) (each a “Fund”, or collectively the “Funds”) are series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Funds’ shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”).
The following table is a summary of the Strategy Commencement Date and Strategy of the Funds:
Fund Ticker |
Strategy Commencement Date |
Strategy |
ETFMG Travel Tech ETF |
2/12/2020 |
Seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Travel Technology Index NTR (the “Index”). |
ETFMG 2x Daily Travel Tech ETF |
6/15/2021 |
Seeks to provide daily investment results that, before fees and expenses, correspond to two times (2x) the daily total return of the Index. The Fund does not seek to achieve its stated investment objective over a period of time greater than a single day. |
The Funds may use a combination of swaps on the Index and swaps on an ETF whose investment objective is to track the performance of the same, or a substantially similar index to achieve its investment objective.
The Funds each currently offer one class of shares, which have no front end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of each Fund have equal rights and privileges.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. Market prices for the shares may be different from their net asset value (“NAV”). Each Fund issues and redeems shares on a continuous basis at NAV only in blocks of 50,000 shares for AWAY and 10,000 shares for AWYX, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the shares directly from a Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in Transaction Fees” in the Statements of Changes in Net Assets.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Fund may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR(S) for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying Fund’s operations and policies, please refer to those Fund’s semiannual and annual reports, which are filed with the SEC.
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by ETF Managers Group, LLC (the “Adviser”), using procedures adopted by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2022, the Funds did not hold any securities that were fair valued.
As described above, the Funds utilize various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following is a summary of the inputs used to value the Funds’ net assets as of September 30, 2022:
ETFMG Travel Tech ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 145,370,977 | $ | — | $ | — | $ | 145,370,977 | ||||||||
Short-Term Investments | 1,325,364 | — | — | 1,325,364 | ||||||||||||
ETFMG Sit Ultra Short ETF** | 1,201,875 | — | — | 1,201,875 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 18,634,059 | ||||||||||||
Total Investments in Securities | $ | 147,898,216 | $ | — | $ | — | $ | 166,532,275 |
ETFMG 2x Daily Travel Tech ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Short-Term Investments | $ | 10,377 | $ | — | $ | — | $ | 10,377 | ||||||||
Total Investments in Securities | $ | 10,377 | $ | — | $ | — | $ | 10,377 |
Swap Contracts*** | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Long Total Return Equity Swap Contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Total Swap Contracts | $ | — | $ | — | $ | — | $ | — |
^ | See Schedule of Investments for classifications by country and industry. |
* | Certain investments that are measured at fair value used the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedules of Investments. |
** | Investment was purchased with collateral. |
*** | Swap contracts are derivative instruments, which are presented at the unrealized appreciation/depreciation on the instrument. |
B. | Federal Income Taxes. The Funds have each elected to be taxed as a “regulated investment company” and intend to distribute substantially all taxable income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of each Fund’s next taxable year.
Each Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Each Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2022 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
As of September 30, 2022, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for state purposes, generally a range of three to four years from the date of filing), as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Funds may be subject to income, withholding or other taxes imposed by foreign countries. |
D. | Foreign Currency Translations and Transactions. The Funds may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income are generally declared and paid by each of the Funds on a quarterly basis. Distributions to shareholders from realized gains on securities for each Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
G. | Share Valuation. The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. For Authorized Participants, the offering and redemption price per share for the Funds are equal to the Funds’ respective net asset value per share. |
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
H. | Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. |
Derivatives
The Funds may enter into swap agreements; including interest rate, index, and total return swap agreements. Swap agreements are contracts between parties in which one party agrees to make periodic payments to the other party based on the change in market value or level of a specified rate, index or asset. In return, the other party agrees to make payments to the first party based on the return of a different specified rate, index or asset. Swap agreements will usually be done on a net basis, i.e., where the two parties make net payments with a Fund receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess, if any, of a Fund’s obligations over its entitlements with respect to each swap is accrued on a daily basis and an amount of cash or equivalents having an aggregate value at least equal to the accrued excess is maintained by the Fund.
The total return swap contracts are subject to master netting agreements, which are agreements between a Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund through a single payment, in the event of default or termination. Amounts presented on the schedule of total return swaps are gross settlement amounts.
The following table presents the Funds’ gross derivative assets and liabilities by counterparty and contract type, net of amounts available for offset under a master netting agreement and the related collateral received or pledged by the Funds as of September 30, 2022.
ETFMG 2x Daily Travel Tech ETF
Gross Amounts of Recognized Assets Presented in the Statements |
Gross Amounts |
Gross Amounts not offset in the Statements of Assets & Liabilities |
||||||||||||||||||||||
Counterparty |
Investment Type |
of Assets & Liabilities |
Available Offset |
Net Amounts |
Financial Instruments |
Collateral Received |
Net Amount |
|||||||||||||||||
Cowen and Company, LLC | Total Return Swap Contract | $ | (75,881 | ) | $ | — | $ | (75,881 | ) | $ | — | $ | — | $ | (75,881 | ) |
The average monthly notional amount of the swap contracts during the year ended September 30, 2022 for AWYX was $896,894.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The following is a summary of the effect of swap contracts on the Funds’ Statements of Assets and Liabilities as of September 30, 2022:
Assets | Liabilities |
Net Unrealized Gain (Loss) |
||||||||||||
ETFMG 2x Daily Travel Tech ETF |
Swap Contract | $ | — | $ | 75,881 | $ | — |
The following is a summary of the effect of swap contracts on the Funds’ Statements of Operations for the year ended September 30, 2022:
Realized Gain (Loss) |
Change in Unrealized Appreciation/Depreciation |
|||||||||
ETFMG 2x Daily Travel Tech ETF |
Swap Contract | $ | (603,656 | ) | $ | — | ||||
NOTE 3 – RISK FACTORS
Investing in the Funds may involve certain risks, as discussed in the Funds’ prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a Fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Funds, other than VALT, are not actively managed (“Index Funds”). Therefore, those Funds follow the securities included in its respective index during upturns as well as downturns. Because of their indexing strategies, the Index Funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Index Funds’ expenses, the Index Funds’ performance may be below that of their respective index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that a Fund’s or an index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19),have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect lobal, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility. exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. A Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, leverage, imperfect daily correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions. The use of derivatives is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The use of derivatives may result in larger losses or smaller gains than directly investing in securities. When a Fund uses derivatives, there may be imperfect correlation between the value of the reference assets and the derivative, which may prevent the Fund from achieving its investment objective. Because derivatives often require only a limited initial investment, the use of derivatives may expose a Fund to losses in excess of those amounts initially invested.
Daily Index Correlation/Tracking Risk. There is no guarantee that a Fund will achieve a high degree of correlation to the Index and therefore achieve its daily leveraged investment objective. To achieve a high degree of correlation with the Index, a Fund seeks to rebalance its portfolio daily to keep leverage consistent with its daily leveraged investment objective. In addition, a Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that a Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day. Market disruptions, regulatory restrictions and extreme volatility will also adversely affect a Fund’s ability to adjust exposure to the required levels.
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Funds.
A complete description of the principal risks is included in each Fund’s prospectus under the heading “Principal Investment Risks.”
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
The Adviser serves as the investment advisor to the Funds. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Funds, and the Adviser, the Adviser provides investment advice to the Funds and oversees the day-to-day operations of the Funds, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Adviser is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Funds to operate.
Under the Investment Advisory Agreement, the Adviser has overall responsibility for the general management and administration of the Funds and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Funds to operate. The Funds unitary fees are accrued daily and paid monthly. The Adviser bears the costs of all advisory and non-advisory services required to operate the Funds, in exchange for a single unitary fee at the following annual rates:
ETFMG Travel Tech ETF | 0.75 | % | ||
ETFMG 2x Daily Travel Tech ETF | 0.95 | % | ||
Under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Funds, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Adviser has entered into an agreement with its affiliate ETFMG Financial, LLC to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds. Level ETF Ventures, LLC (“Level”) serves as the index provider for AWAY and AWYX. Level is not affiliated with the Trust or the Adviser.
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Funds. The Adviser compensates the Administrator for these services under an administration agreement between the two parties.
The Adviser pays each independent Trustee a quarterly fee for service to the Funds. Each Trustee is also reimbursed by the Adviser for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Funds have each adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to each Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. During the year ended September 30, 2022, the Funds did not incur any 12b-1 expenses.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, during the year ended September 30, 2022:
Purchases | Sales | |||
ETFMG Travel Tech ETF | $113,621,455 | $100,345,806 |
The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the year ended September 30, 2022:
Purchases In- | Sales In- | |||
Kind | Kind | |||
ETFMG Travel Tech ETF | $ 85,035,173 | $123,481,358 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Funds’ determination of taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations during the year ended September 30, 2022.
NOTE 7 — SECURITIES LENDING
The Funds, may lend up to 33 1⁄3% of the value of the securities in their portfolios to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (the “Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Funds receive compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Funds continue to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss on the fair value of securities loaned that may occur during the term of the loan will be for the account of the Funds. The Funds have the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations, either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Adviser; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Adviser. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Funds could also experience delays in recovering their securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As of September 30, 2022 the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
Fund |
Values of Securities on Loan |
Fund Collateral Received* |
||
ETFMG Travel Tech ETF | $19,033,424 | $19,877,521 | ||
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, a money market fund with an overnight and continuous maturity, and ETFMG Sit Ultra Short ETF as shown on the Schedule of Investments.
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2022 were as follows:
Cost |
Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
ETFMG Travel Tech ETF | $ | 283,689,460 | $ | 2,119,804 | $ | (119,276,989 | ) | $ | (117,157,185 | ) | ||||||
ETFMG 2x Daily Travel Tech ETF | 10,377 | — | — | — |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the components of distributable earnings (loss) on a tax basis were as follows:
Undistributed Ordinary Income |
Undistributed Long-Term Gain |
Total Distributable Earnings |
Other Accumulated Loss |
Total Accumulated Gain (Loss) |
||||||||||||||||
ETFMG Travel Tech ETF | $ | — | $ | — | $ | — | $ | (64,214,793 | ) | $ | (181,371,978 | ) | ||||||||
ETFMG 2x Daily Travel Tech ETF | — | — | — | (168,553 | ) | (168,553 | ) |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the Funds had accumulated capital loss carryovers of:
Capital Loss Carryforward ST |
Capital Loss Carryforward LT |
Expires | ||||||||||
ETFMG Travel Tech ETF | $ | (43,947,533 | ) | $ | (19,161,724 | ) | Indefinite | |||||
ETFMG 2x Daily Travel Tech ETF | (168,553 | ) | — | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ending September 30, 2022.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Late Year Ordinary Loss |
Post- October Capital Loss |
|||||||
ETFMG Travel Tech ETF | $ | (1,104,607 | ) | $ | — | |||
ETFMG 2x Daily Travel Tech ETF | — | — |
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2022, the following table shows the reclassifications made:
Total | ||||||||
Distributable | Paid-In | |||||||
Earnings/(Loss) | Capital | |||||||
ETFMG Travel Tech ETF | $ | 15,540,906 | $ | (15,540,906 | ) | |||
ETFMG 2x Daily Travel Tech ETF | 496,485 | (496,485 | ) |
The tax character of distributions paid during the fiscal years ended September 30, 2022 and the year ended September 30, 2021 were as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
From Ordinary Income |
From Capital Gains |
From Ordinary Income |
From Capital Gains |
|||||||||||||
ETFMG Travel Tech ETF | $ | — | $ | — | $ | 24,500 | $ | — | ||||||||
ETFMG 2x Daily Travel Tech ETF | — | — | — | — |
NOTE 9 – INVESTMENTS IN AFFILIATES
ETFMG Travel Tech ETF
ETFMG Travel Tech ETF owned the following company during the year ended September 30, 2022. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the year ended September 30, 2022. Transactions during the year in this security were as follows:
Security Name |
Value at September 30, 2021 |
Purchases | Sales |
Realized Gain (Loss)(1) |
Change in Unrealized Appreciation (Depreciation) |
Dividend Income |
Value at September 30, 2022 |
Ending Shares |
||||||||||||||||||||||||
ETFMG Sit Ultra | ||||||||||||||||||||||||||||||||
Short ETF * | $ | 1,243,875 | $ | — | $ | — | $ | — | $ | (42,000 | ) | $ | — | $ | 1,201,875 | 25,000 | ||||||||||||||||
* | Affiliate as of September 30, 2022. |
1 | Realized Losses include transactions in affiliated investments and affiliated in-kind redemptions. |
NOTE 10 – LEGAL MATTERS
The Trust, the Adviser, and certain officers and affiliated persons of the Adviser (together with the Adviser, the “Adviser Defendants”) were named as defendants in an action filed December 21, 2021, in the Superior Court of New Jersey, Union County, captioned PureShares, LLC, d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. UNN-C-152-21 (the “NJ Action”). The NJ Action asserted breach of contract and other tort claims and sought damages in unspecified amounts and injunctive relief. On May 25, 2022, the court in the NJ Action dismissed with prejudice all claims asserted against the Trust, as well as all contract claims and all except one tort claim asserted against the Adviser Defendants.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As of September 30, 2022, there were no adjustments made to the accompanying financial statements based on the above legal matters.
NOTE 11 – SUBSEQUENT EVENTS
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.
ETFMG TM ETFs
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of ETFMG Travel Tech ETF and ETFMG 2x Daily Travel Tech ETF:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedule of investments of ETFMG Travel Tech ETF and the schedules of investments and total return swaps of ETFMG 2x Daily Travel Tech ETF (collectively the “Funds”) (certain of the Funds comprising ETF Managers Trust) as of September 30, 2022, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the periods indicated therein and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of September 30, 2022, and the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor of one or more series of the Trust since 2013.
New York, New York
November 29, 2022
ETFMG TM ETFs
Six Months Ended September 30, 2022 (Unaudited)
As a shareholder of the Funds you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 invested for the period of time as indicated in the table below.
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
Fund Name |
Beginning Account Value April 1, 2022 |
Ending Account Value September 30, 2022 |
Expenses Paid During the Period^ |
Annualized Expense Ratio During the Period April 1, 2022 to September 30, 2022 |
||||||||||||
ETFMG Travel Tech ETF | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 667.40 | $ | 3.18 | 0.76 | % | ||||||||
Hypothetical (5% annual) | 1,000.00 | 1,021.26 | 3.85 | 0.76 | % | |||||||||||
ETFMG 2x Daily Travel Tech ETF | ||||||||||||||||
Actual | 1,000.00 | 406.00 | 3.35 | 0.95 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,020.31 | 4.81 | 0.95 | % |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/365 (to reflect the one-half year period).
ETFMG TM ETFs
September 30, 2022 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2022, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Fund Name | Qualified Dividend Income |
ETFMG Travel Tech ETF | 0.00% |
ETFMG 2x Daily Travel Tech ETF | 0.00% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2022 was as follows:
Fund Name | Dividends Received Deduction |
ETFMG Travel Tech ETF | 0.00% |
ETFMG 2x Daily Travel Tech ETF | 0.00% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for each Fund were as follows:
Fund Name | Short-Term Capital Gain |
ETFMG Travel Tech ETF | 0.00% |
ETFMG 2x Daily Travel Tech ETF | 0.00% |
During the year ended September 30, 2022, the Funds did not declare any long-term realized gains distributions.
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the Securities and Exchange Commission (“SEC”) on Part F of Form N-PORT. The Funds’ Part F of Form N-PORT is available on the website of the SEC at www.sec.gov and the Funds’ website at www.etfmgfunds.com. Each Fund’s portfolio holdings are posted on their website at www.etfmgfunds.com daily.
ETFMG TM ETFs
SUPPLEMENTARY INFORMATION
September 30, 2022 (Unaudited) (Continued)
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at (877) 756-7873, by accessing the SEC’s website at www.sec.gov, or by accessing the Funds’ website at www.etfmgfunds.com.
Information regarding how the Funds voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at (877) 756-7873 or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
ETFMG TM ETFs
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
ETFMG TM ETFs
Board of Trustees (Continued)
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
Independent Trustees | ||||
Terry Loebs (1963) |
Trustee (since 2014); Lead Independent Trustee (since 2020) |
Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). |
17 | None |
Eric Wiegel (1960) |
Trustee (since 2020) |
Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018). |
17 | None |
ETFMG TM ETFs
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S. Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2022
Wedbush ETFMG Video Game Tech ETF
Wedbush ETFMG Global Cloud Technology ETF
The funds are series of ETF Managers Trust.
Wedbush ETFMG TM ETF
TABLE OF CONTENTS
September 30, 2022
Dear Shareholder,
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these ETFs. The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
Market Overview
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and, in many cases, unprecedented volatility and severe losses due to the global pandemic caused by COVID-19. Some sectors of the economy and individual issuers have experienced particularly large losses because of these disruptions. In response to these disruptions, the U.S. government and the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, contributing to inflationary pressure and expectations for inflation. Further, Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict have increased volatility and uncertainty in the financial markets and adversely affect regional and global economies. The full extent and duration of these conditions and the totality of repercussions are impossible to predict but could continue to result in significant market disruptions and may continue to negatively affect global supply chains, inflation and global growth. These and related events have impacted the ETFs’ performance, among other factors, and the value of an investment in the ETFs. We encourage you to talk with your financial advisor and visit etfmg.com for further insight about investing in today’s markets.
Performance Overview
During the fiscal-year ended September 30, 2022, the S&P 500 Information Technology Sector Index, a broad measure of US listed technology companies, returned -20.0%. During the same period, the S&P Global 1200 Information Technology Sector Index, a broad measure of global technology companies, returned -24.5%. Below is a performance overview for each Fund for the same 12-month period, except as noted otherwise.
Wedbush ETFMG Global Cloud Technology ETF (IVES)
The Wedbush ETFMG Global Cloud Technology ETF (“IVES”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Dan Ives Global Cloud Technology Prime Index (the “Index”).
Over the period, the total return for IVES was -44.44%, while the total return for the Index was - 44.03%. The best performers in IVES, on the basis of contribution to return, were Citrix Systems Inc, Switch Inc - A, Datto Holding Corp, Cyrusone Holdco Llc and Chindata Group Holdings-Adr while the worst performers were Sinch Ab, Gds Holdings Ltd - Adr, Kingsoft Cloud Holdings-Adr, Elastic Nv, and Mongodb Inc
At the end of the reporting period, IVES saw an allocation of 96.26% to the Information Technology sector and 2.83% to Real Estate. IVES was exposed predominately to the United States, with 56.33% of its portfolio holdings exposed to the U.S., 12.84% to Japan and 9.46% to China.
Wedbush ETFMG Video Game Tech ETF (GAMR)
The Wedbush ETFMG Video Game Tech ETF (“GAMR”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the EEFund Video Game Tech Index (the “Index”).
Over the period, the total return for GAMR was -37.58%, while the total return for the Index was - 37.46%. The best performers in GAMR on the basis of contribution to return were Razer Inc, Htc Corp, Zynga Inc - Cl A, Wemade Co Ltd and Nexon Co Ltd. while the worst performers were Skillz Inc, Unity Software Inc, Bilibili Inc-Sponsored Adr, Netmarble Corp, and Playtika Holding Corp.
At the end of the reporting period, GAMR saw an allocation of 76.68% to the Communication Services sector, 16.69% to Information Technology and 5.13% to Consumer Discretionary. GAMR was exposed predominately to the United States, with 30.66% of its portfolio holdings exposed to the U.S., 21.35% to Japan and 15.74% to Korea.
You can find further details about IVES and GAMR by visiting www.etfmg.com, or by calling 1-844-383-6477.
Sincerely,
Samuel Masucci III
Chairman of the Board
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
5 Year Return |
Since Inception (3/8/2016) |
Value of $10,000 (9/30/2022) |
||||||||||||
Wedbush ETFMG Global Cloud Technology ETF (NAV) | -44.44% | -4.02% | 2.69% | $ | 11,906 | |||||||||||
Wedbush ETFMG Global Cloud Technology ETF (Market) | -44.43% | -4.07% | 2.67% | $ | 11,887 | |||||||||||
S&P 500 Index | -15.47% | 9.24% | 11.52% | $ | 20,452 | |||||||||||
Dan Ives Global Cloud Technology Prime Index* | -44.03% | -3.81% | 2.66% | $ | 11,882 |
* On April 7, 2020, the Fund’s investment objective and principal investment strategy were substantially revised; therefore, the performance and average annual total returns shown for periods prior to April 7, 2020 is likely to have differed had the Fund’s current investment strategy been in effect during those periods. The Fund’s prior investment objective sought to provide investment results that corresponded to the performance of the Reality Shares Drone Index. The Fund began tracking the Dan Ives Global Cloud Technology Prime Index on April 7, 2020.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on March 8, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments |
|||
1 | ETFMG Sit Ultra Short ETF** | 8.29% | ||
2 | Itochu Techno-Solutions Corp. | 3.64% | ||
3 | SCSK Corp. | 3.61% | ||
4 | Nice, Ltd. | 3.50% | ||
5 | Elastic NV | 3.39% | ||
6 | Open Text Corp. | 3.37% | ||
7 | GDS Holdings, Ltd. - ADR | 2.71% | ||
8 | Citrix Systems, Inc. | 2.54% | ||
9 | Chindata Group Holdings, Ltd. - ADR | 2.37% | ||
10 | Cloudflare, Inc. - Class A | 2.36% | ||
Top Ten Holdings 35.78% of Total Investments | ||||
* Current Fund holdings may not be indicative of future Fund holdings. | ||||
** Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
5 Year Return |
Since Inception (3/8/2016) |
Value of $10,000 (9/30/2022) |
||||||||||||
Wedbush ETFMG Video Game Tech ETF (NAV) | -37.58% | 4.24% | 13.00% | $ | 22,301 | |||||||||||
Wedbush ETFMG Video Game Tech ETF (Market) | -37.78% | 4.11% | 12.91% | $ | 22,185 | |||||||||||
S&P 500 Index | -15.47% | 9.24% | 11.52% | $ | 20,452 | |||||||||||
EEFund Video Game Tech Index | -37.46% | 4.77% | 13.28% | $ | 22,675 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on March 8, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments |
|||
1 | ETFMG Sit Ultra Short ETF** | 5.91% | ||
2 | CD Projekt SA | 2.57% | ||
3 | Stillfront Group AB | 2.38% | ||
4 | Gree, Inc. | 2.22% | ||
5 | Nintendo Co., Ltd. | 2.17% | ||
6 | Embracer Group AB | 2.17% | ||
7 | Square Enix Holdings Co., Ltd. | 2.16% | ||
8 | Capcom Co., Ltd. | 2.09% | ||
9 | Activision Blizzard, Inc. | 2.07% | ||
10 | International Games System Co., Ltd. | 2.06% | ||
Top Ten Holdings 25.80% of Total Investments | ||||
* Current Fund holdings may not be indicative of future Fund holdings. | ||||
** Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
Wedbush ETFMG TM ETF
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
IVES
The Wedbush ETFMG Global Cloud Technology ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Dan Ives Global Cloud Technology Prime Index (the “Index”).
Cloud Technology Companies may have limited product lines, markets, financial resources or personnel. These companies typically face intense competition and potentially rapid product obsolescence. In addition, many Cloud Technology Companies store sensitive consumer information and could be the target of cybersecurity attacks and other types of theft, which could have a negative impact on these companies. As a result, Cloud Technology Companies may be adversely impacted by government regulations and may be subject to additional regulatory oversight with regard to privacy concerns and cybersecurity risk. These companies are also heavily dependent on intellectual property rights and may be adversely affected by loss or impairment of those rights. Cloud computing companies could be negatively impacted by disruptions in service caused by hardware or software failure, or by interruptions or delays in service by third-party data center hosting facilities and maintenance providers. Cloud Technology Companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology. Companies in the technology field, including companies in the computers, telecommunications and electronics industries, face intense competition, which may have an adverse effect on profit margins.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
The Fund is distributed by ETFMG Financial LLC, which is not affiliated with Wedbush Securities, Prime Indexes, or Level ETF Ventures.
GAMR
The Wedbush ETFMG Video Game Tech ETF (the “Fund” or the “Video Game Tech ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the EEFund Video Game Tech Index™ (the “Index”).
Video Game Tech Companies face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources or personnel, may have products that face rapid obsolescence, and are heavily dependent on the protection of patent and intellectual property rights. Video Game Tech Companies are also subject to increasing regulatory constraints, particularly with respect to cybersecurity and privacy. Such factors may adversely affect the profitability and value of such companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the EEFund Video Game Tech Index™. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
The EEFund Video Game Tech™ Index provides a benchmark for investors interested in tracking companies actively involved in the electronic gaming industry including the entertainment, education and simulation segments. The Index uses a market capitalization weighted allocation across the pure play and non-pure play sectors and a set weight for the conglomerate sector as well as an equal weighted allocation methodology for all components within each sector allocation. The index was created and is maintained by EEFund Management. You cannot invest directly in an index.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
The Fund is distributed by ETFMG Financial LLC, which is not affiliated with Wedbush Securities, Prime Indexes, or Level ETF Ventures.
Wedbush ETFMG TM ETF
As of September 30, 2022 (Unaudited)
Wedbush ETFMG Global Cloud Technology ETF |
Wedbush ETFMG Video Game Tech ETF |
|||||
As a percent of Net Assets: | ||||||
Australia | 3.4 | % | —% | |||
Canada | 4.3 | 0.3 | ||||
Cayman Islands | 9.6 | 9.9 | ||||
France | — | 2.5 | ||||
Germany | 1.7 | 0.5 | ||||
Israel | 5.0 | 0.5 | ||||
Italy | — | 0.4 | ||||
Japan | 12.7 | 20.8 | ||||
Netherlands | 4.3 | — | ||||
Norway | — | 0.9 | ||||
Poland | — | 3.1 | ||||
Republic of Korea | — | 16.0 | ||||
Singapore | 2.9 | — | ||||
Sweden | 1.2 | 6.9 | ||||
Switzerland | — | 0.6 | ||||
Taiwan, Province of China | — | 3.4 | ||||
United Kingdom | 3.1 | 2.9 | ||||
United States | 50.9 | 30.3 | ||||
Virgin Islands | — | 0.0 | * | |||
Exchange Traded Funds | 10.5 | 7.1 | ||||
Short-Term and other Net Assets (Liabilities) | (9.6 | ) | (6.1 | ) | ||
100.0 | % | 100.0 | % |
* Amount is less than 0.05%.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Schedule of Investments
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 99.1% | ||||||||
Australia - 3.4% | ||||||||
IT Services - 3.4% (d) | ||||||||
Megaport, Ltd. (a) | 36,921 | $ | 183,973 | |||||
NEXTDC, Ltd. (a) | 106,595 | 601,380 | ||||||
Total IT Services | 785,353 | |||||||
Canada - 4.3% | ||||||||
Software - 4.3% (d) | ||||||||
Open Text Corp. (a) | 36,928 | 976,032 | ||||||
Cayman Islands - 9.6% | ||||||||
IT Services - 9.6% (d) | ||||||||
Chinasoft International, Ltd. | 710,414 | 437,128 | ||||||
Chindata Group Holdings, Ltd. - ADR (a)(b) | 85,022 | 686,978 | ||||||
GDS Holdings, Ltd. - ADR (a)(b) | 44,467 | 785,287 | ||||||
Kingsoft Cloud Holdings, Ltd. - ADR (a)(b) | 56,440 | 112,316 | ||||||
Vnet Group, Inc. - ADR (a)(b) | 34,304 | 188,672 | ||||||
Total IT Services | 2,210,381 | |||||||
Germany - 1.7% | ||||||||
Software - 1.7% (d) | ||||||||
Software AG | 17,358 | 400,114 | ||||||
Israel - 5.0% | ||||||||
Software - 5.0% (d) | ||||||||
JFrog, Ltd. (a)(b) | 5,537 | 122,423 | ||||||
Nice, Ltd. (a) | 5,327 | 1,015,137 | ||||||
Total Software | 1,137,560 | |||||||
Japan - 12.7% | ||||||||
IT Services - 12.1% (d) | ||||||||
Hennge KK (a) | 7,588 | 44,040 | ||||||
Itochu Techno-Solutions Corp. | 45,073 | 1,055,742 | ||||||
NS Solutions Corp. | 21,367 | 515,979 | ||||||
SCSK Corp. | 69,236 | 1,047,653 | ||||||
TechMatrix Corp. | 10,396 | 120,244 | ||||||
Total IT Services | 2,783,658 | |||||||
Software - 0.6% (d) | ||||||||
Cybozu, Inc. | 12,319 | 127,676 | ||||||
Total Japan | 2,911,334 | |||||||
Netherlands - 4.3% | ||||||||
Software - 4.3% (d) | ||||||||
Elastic NV (a) | 13,722 | 984,417 |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Singapore - 2.9% | ||||||||
Real Estate Investment Trusts (REITs) - 2.9% | ||||||||
Digital Core REIT Management Pte, Ltd. (a) | 261,798 | $ | 183,259 | |||||
Keppel DC REIT | 399,740 | 473,147 | ||||||
Total Real Estate Investment Trusts (REITs) | 656,406 | |||||||
Sweden - 1.2% | ||||||||
Software - 1.2% (d) | ||||||||
Sinch AB (a) | 197,055 | 267,341 | ||||||
United Kingdom - 3.1% | ||||||||
Software - 3.1% (d) | ||||||||
Bytes Technology Group PLC | 55,956 | 262,280 | ||||||
Micro Focus International PLC | 78,515 | 456,211 | ||||||
Total Software | 718,491 | |||||||
United States - 50.9% | ||||||||
Communications Equipment - 0.1% | ||||||||
Inseego Corp. (a)(b) | 6,002 | 12,424 | ||||||
IT Services - 12.5% (d) | ||||||||
Cloudflare, Inc. - Class A (a) | 12,368 | 684,074 | ||||||
DigitalOcean Holdings, Inc. (a)(b) | 5,404 | 195,463 | ||||||
Edgio, Inc. (a) | 12,249 | 34,052 | ||||||
Fastly, Inc. - Class A (a) | 6,813 | 62,407 | ||||||
Grid Dynamics Holdings, Inc. (a) | 3,752 | 70,275 | ||||||
Kyndryl Holdings, Inc. (a) | 12,642 | 104,549 | ||||||
MongoDB, Inc. (a)(b) | 3,043 | 604,218 | ||||||
Okta, Inc. (a) | 8,796 | 500,229 | ||||||
Rackspace Technology, Inc. (a)(b) | 11,740 | 47,899 | ||||||
SolarWinds Corp. (a) | 8,971 | 69,525 | ||||||
Switch, Inc. - Class A (b) | 13,653 | 459,970 | ||||||
Unisys Corp. (a) | 3,779 | 28,531 | ||||||
Total IT Services | 2,861,192 | |||||||
Software - 32.9% (d) | ||||||||
8x8, Inc. (a) | 6,688 | 23,074 | ||||||
Alteryx, Inc. - Class A (a) | 3,819 | 213,253 | ||||||
Appfolio, Inc. - Class A (a) | 1,951 | 204,309 | ||||||
Appian Corp. (a) | 4,039 | 164,912 | ||||||
Blackbaud, Inc. (a) | 2,956 | 130,241 | ||||||
Box, Inc. - Class A (a)(b) | 8,031 | 195,876 | ||||||
Citrix Systems, Inc. | 7,074 | 735,696 | ||||||
CommVault Systems, Inc. (a) | 2,498 | 132,494 | ||||||
Confluent, Inc. - Class A (a)(b) | 15,718 | 373,617 | ||||||
Coupa Software, Inc. (a) | 4,212 | 247,666 | ||||||
Datadog, Inc. - Class A (a)(b) | 7,553 | 670,555 | ||||||
Domo, Inc. - Class B (a) | 1,880 | 33,821 | ||||||
Dropbox, Inc. - Class A (a) | 20,560 | 426,003 | ||||||
Everbridge, Inc. (a) | 2,215 | 68,399 |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Schedule of Investments
September 30, 2022 (Continued)
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Schedule of Investments
September 30, 2022 (Continued)
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
PLC Public Limited Company
(a) | Non-income producing security. |
(b) | All or a portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the annualized seven-day yield at period end. |
(d) | As of September 30, 2022, the Fund had a significant portion of its assets invested in the Software & IT Services Industries. |
(e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor's Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services ("Fund Services").
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 99.0% | ||||||||
Canada - 0.3% | ||||||||
Interactive Media & Services - 0.3% | ||||||||
Enthusiast Gaming Holdings, Inc. (a) | 172,458 | $ | 147,320 | |||||
Cayman Islands - 9.9% | ||||||||
Electronic Equipment, Instruments & Components - 0.3% | ||||||||
VSTECS Holdings, Ltd. | 333,584 | 186,985 | ||||||
Entertainment - 7.4% (d) | ||||||||
Bilibili, Inc. - ADR (a)(b) | 53,801 | 824,231 | ||||||
CMGE Technology Group, Ltd. (a) | 886,137 | 165,946 | ||||||
HUYA, Inc. - ADR (a)(b) | 66,716 | 148,110 | ||||||
iDreamSky Technology Holdings, Ltd. (a)(f) | 326,648 | 150,223 | ||||||
IGG, Inc. (a) | 526,819 | 162,415 | ||||||
Kingsoft Corp., Ltd. | 98,523 | 262,321 | ||||||
NetDragon Websoft Holdings, Ltd. | 155,615 | 283,490 | ||||||
NetEase, Inc. - ADR | 5,470 | 413,532 | ||||||
Sea, Ltd. - ADR (a)(b) | 4,923 | 275,934 | ||||||
XD, Inc. (a) | 531,044 | 1,082,431 | ||||||
Total Entertainment | 3,768,633 | |||||||
Interactive Media & Services - 2.2% | ||||||||
Hello Group, Inc. - ADR (b) | 57,614 | 266,177 | ||||||
JOYY, Inc. - ADR (b) | 9,990 | 259,740 | ||||||
Sohu.com, Ltd. - ADR (a) | 12,382 | 198,979 | ||||||
Tencent Holdings, Ltd. | 11,655 | 395,545 | ||||||
Total Interactive Media & Services | 1,120,441 | |||||||
Total Cayman Islands | 5,076,059 | |||||||
France - 2.5% | ||||||||
Entertainment - 1.7% (d) | ||||||||
Ubisoft Entertainment SA (a) | 30,564 | 848,301 | ||||||
Media - 0.8% | ||||||||
Vivendi SE | 55,122 | 430,664 | ||||||
Total France | 1,278,965 | |||||||
Germany - 0.5% | ||||||||
Health Care Equipment & Supplies - 0.5% | ||||||||
Carl Zeiss Meditec AG | 2,513 | 264,634 | ||||||
Israel - 0.5% | ||||||||
Software - 0.5% | ||||||||
ironSource, Ltd. - Class A (a) | 75,475 | 259,634 |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Italy - 0.4% | ||||||||
Entertainment - 0.4% (d) | ||||||||
Digital Bros SpA | 9,223 | $ | 204,461 | |||||
Japan - 20.8% | ||||||||
Entertainment - 15.4% (d) | ||||||||
Akatsuki, Inc. | 13,214 | 190,089 | ||||||
Capcom Co., Ltd. | 50,561 | 1,271,623 | ||||||
COLOPL, Inc. | 44,866 | 210,799 | ||||||
DeNa Co., Ltd. | 22,278 | 281,534 | ||||||
GungHo Online Entertainment, Inc. | 18,380 | 282,564 | ||||||
Koei Tecmo Holdings Co., Ltd. | 18,146 | 297,773 | ||||||
Konami Holdings Corp. | 25,803 | 1,190,935 | ||||||
Mixi, Inc. | 17,867 | 283,072 | ||||||
Nexon Co., Ltd. | 68,250 | 1,203,441 | ||||||
Nintendo Co., Ltd. | 32,760 | 1,325,069 | ||||||
Square Enix Holdings Co., Ltd. | 30,568 | 1,315,820 | ||||||
Total Entertainment | 7,852,719 | |||||||
Household Durables - 0.8% | ||||||||
Sony Group Corp. - ADR | 6,144 | 393,523 | ||||||
Interactive Media & Services - 2.6% | ||||||||
Gree, Inc. | 222,178 | 1,352,441 | ||||||
Leisure Products - 1.5% | ||||||||
Bandai Namco Holdings, Inc. | 4,166 | 271,525 | ||||||
Furyu Corp. | 30,593 | 213,282 | ||||||
Sega Sammy Holdings, Inc. | 20,769 | 282,556 | ||||||
Total Leisure Products | 767,363 | |||||||
Media - 0.5% | ||||||||
CyberAgent, Inc. | 31,518 | 265,245 | ||||||
Total Japan | 10,631,291 | |||||||
Norway - 0.9% | ||||||||
Semiconductors & Semiconductor Equipment - 0.9% | ||||||||
Nordic Semiconductor ASA (a) | 34,173 | 456,644 | ||||||
Poland - 3.1% | ||||||||
Entertainment - 3.1% (d) | ||||||||
CD Projekt SA | 77,631 | 1,569,253 | ||||||
Republic of Korea - 16.0% | ||||||||
Entertainment - 15.2% (d) | ||||||||
Com2uS Corp. | 3,688 | 199,261 | ||||||
Com2uS Holdings Corp. (a) | 5,063 | 153,585 | ||||||
JoyCity Corp. (a) | 64,380 | 160,196 | ||||||
Kakao Games Corp. (a) | 36,136 | 1,077,235 | ||||||
Krafton, Inc. (a) | 7,671 | 1,125,959 | ||||||
NCSoft Corp. | 4,802 | 1,161,314 | ||||||
Neowiz (a) | 7,582 | 195,552 |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Netmarble Corp. (f) | 29,727 | $ | 1,065,908 | |||||
Nexon Co., Ltd. (a) | 18,497 | 192,637 | ||||||
NHN Corp. (a) | 11,997 | 180,286 | ||||||
Pearl Abyss Corp. (a) | 33,464 | 1,091,141 | ||||||
Webzen, Inc. (a) | 16,596 | 172,259 | ||||||
WeMade Entertainment Co., Ltd. | 30,274 | 969,140 | ||||||
Total Entertainment | 7,744,473 | |||||||
Hotels, Restaurants & Leisure - 0.4% | ||||||||
DoubleUGames Co., Ltd. | 7,079 | 217,214 | ||||||
Interactive Media & Services - 0.4% | ||||||||
AfreecaTV Co., Ltd. | 4,032 | 179,238 | ||||||
Total Republic of Korea | 8,140,925 | |||||||
Sweden - 6.9% | ||||||||
Entertainment - 6.6% (d) | ||||||||
Embracer Group AB (a)(b) | 220,738 | 1,321,725 | ||||||
Modern Times Group MTG AB - Class B (a) | 36,319 | 241,883 | ||||||
Paradox Interactive AB | 21,220 | 339,688 | ||||||
Stillfront Group AB (a) | 671,051 | 1,453,648 | ||||||
Total Entertainment | 3,356,944 | |||||||
Technology Hardware, Storage & Peripherals - 0.3% | ||||||||
Tobii AB (a) | 101,990 | 181,875 | ||||||
Total Sweden | 3,538,819 | |||||||
Switzerland - 0.6% | ||||||||
Technology Hardware, Storage & Peripherals - 0.6% | ||||||||
Logitech International SA (b) | 6,204 | 285,384 | ||||||
Taiwan, Province of China - 3.4% | ||||||||
Entertainment - 2.9% (d) | ||||||||
Gamania Digital Entertainment Co., Ltd. | 112,444 | 205,770 | ||||||
International Games System Co., Ltd. | 110,506 | 1,253,021 | ||||||
Total Entertainment | 1,458,791 | |||||||
Semiconductors & Semiconductor Equipment - 0.5% | ||||||||
Taiwan Semiconductor Manufacturing Co., Ltd. - ADR | 3,698 | 253,535 | ||||||
Total Taiwan, Province of China | 1,712,326 | |||||||
United Kingdom - 2.9% | ||||||||
Entertainment - 0.8% (d) | ||||||||
Frontier Developments PLC (a) | 13,822 | 206,492 | ||||||
Team17 Group PLC (a) | 51,552 | 214,124 | ||||||
Total Entertainment | 420,616 | |||||||
IT Services - 2.1% | ||||||||
Keywords Studios PLC | 40,986 | 1,051,627 | ||||||
Total United Kingdom | 1,472,243 |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
United States - 30.3% | ||||||||
Entertainment - 14.4% (d) | ||||||||
Activision Blizzard, Inc. | 16,986 | $ | 1,262,739 | |||||
Electronic Arts, Inc. | 10,450 | 1,209,170 | ||||||
Playstudios, Inc. (a) | 62,546 | 218,286 | ||||||
Playtika Holding Corp. (a)(b) | 130,555 | 1,225,911 | ||||||
ROBLOX Corp. - Class A (a)(b) | 34,647 | 1,241,748 | ||||||
Sciplay Corp. - Class A (a) | 69,561 | 818,037 | ||||||
Skillz, Inc. (a) | 169,355 | 172,742 | ||||||
Take-Two Interactive Software, Inc. (a) | 11,053 | 1,204,777 | ||||||
Total Entertainment | 7,353,410 | |||||||
Interactive Media & Services - 2.1% | ||||||||
Alphabet, Inc. - Class C (a) | 4,392 | 422,291 | ||||||
Meta Platforms, Inc. - Class A (a) | 2,915 | 395,507 | ||||||
Ziff Davis, Inc. (a)(b) | 3,965 | 271,523 | ||||||
Total Interactive Media & Services | 1,089,321 | |||||||
Semiconductors & Semiconductor Equipment - 3.7% | ||||||||
Advanced Micro Devices, Inc. (a) | 5,855 | 370,973 | ||||||
Cirrus Logic, Inc. (a) | 4,078 | 280,566 | ||||||
Intel Corp. (b) | 15,177 | 391,111 | ||||||
NVIDIA Corp. (b) | 3,458 | 419,767 | ||||||
Qualcomm, Inc. | 3,710 | 419,156 | ||||||
Total Semiconductors & Semiconductor Equipment | 1,881,573 | |||||||
Software - 4.4% | ||||||||
AppLovin Corp. - Class A (a)(b) | 12,052 | 234,893 | ||||||
Dolby Laboratories, Inc. - Class A | 4,108 | 267,636 | ||||||
Microsoft Corp. | 1,851 | 431,098 | ||||||
PTC, Inc. (a)(b) | 2,627 | 274,784 | ||||||
Unity Software, Inc. (a)(b) | 32,330 | 1,030,035 | ||||||
Total Software | 2,238,446 | |||||||
Specialty Retail - 2.4% | ||||||||
GameStop Corp. - Class A (a)(b) | 48,291 | 1,213,553 | ||||||
Technology Hardware, Storage & Peripherals - 3.3% | ||||||||
Apple, Inc. | 3,052 | 421,786 | ||||||
Corsair Gaming, Inc. (a)(b) | 90,890 | 1,031,601 | ||||||
Western Digital Corp. (a) | 7,190 | 234,035 | ||||||
Total Technology Hardware, Storage & Peripherals | 1,687,422 | |||||||
Total United States | 15,463,725 | |||||||
Virgin Islands (UK) - 0.0% (h) | ||||||||
Interactive Media & Services - 0.0% (h) | ||||||||
VK Co., Ltd. - ADR (a)(g) | 21,975 | — | ||||||
TOTAL COMMON STOCKS (Cost $78,212,638) | 50,501,683 |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 19.6% | ||||||||
ETFMG Sit Ultra Short ETF (e) | 75,000 | $ | 3,605,625 | |||||
Mount Vernon Liquid Assets Portfolio, LLC, 3.18% (c) | 6,405,926 | 6,405,926 | ||||||
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $10,153,774) | 10,011,551 | |||||||
SHORT-TERM INVESTMENTS - 0.9% | ||||||||
Money Market Funds - 0.9% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (c) | 447,887 | 447,887 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $447,887) | 447,887 | |||||||
Total Investments (Cost $88,814,299) - 119.5% | 60,961,121 | |||||||
Liabilities in Excess of Other Assets - (19.5)% | (9,960,392 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 51,000,729 |
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
PLC Public Limited Company
(a) | Non-income producing security. |
(b) | All or a portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the annualized seven-day yield at period end. |
(d) | As of September 30, 2022, the Fund had a significant portion of its assets in the Entertainment Industry. |
(e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
(f) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration to qualified instituational investors. At September 30, 2022, the market value of these securities total $1,216,131, which represents 2.4% of total net assets. |
(g) | Value determined using significant unobservable inputs. The value of this security totals $0, which represents 0.0% of total net assets. Classified as Level 3 in the fair value hierarchy. |
(h) | Amount is less than 0.05%. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor's Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services ("Fund Services").
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 2022
Wedbush ETFMG Global Cloud Technology ETF |
Wedbush ETFMG Video Game Tech ETF |
|||||||
ASSETS | ||||||||
Investments in unaffiliated securities, at value* | $ | 26,593,623 | $ | 57,355,496 | ||||
Investments in affiliated securities, at value* | 2,403,750 | 3,605,625 | ||||||
Total Investments in securities, at value | 28,997,373 | 60,961,121 | ||||||
Foreign currency* | 2,741 | — | ||||||
Receivables: | ||||||||
Dividends and interest receivable | 42,593 | 214,403 | ||||||
Securities lending income receivable | 4,377 | 13,173 | ||||||
Total Assets | 29,047,084 | 61,188,697 | ||||||
LIABILITIES | ||||||||
Collateral received for securities loaned (Note 7) | 6,108,845 | 10,153,774 | ||||||
Foreign currency payable to custodian, at value | — | 30 | ||||||
Payables: | ||||||||
Management fees payable | 13,689 | 34,164 | ||||||
Total Liabilities | 6,122,534 | 10,187,968 | ||||||
Net Assets | $ | 22,924,550 | $ | 51,000,729 | ||||
NET ASSETS CONSIST OF: | ||||||||
Paid-in Capital | $ | 43,223,942 | $ | 110,498,137 | ||||
Total Distributable Earnings (Accumulated Losses) | (20,299,392 | ) | (59,497,408 | ) | ||||
Net Assets | $ | 22,924,550 | $ | 51,000,729 | ||||
*Identified Cost: | ||||||||
Investments in unaffiliated securities | $ | 35,278,061 | $ | 85,066,451 | ||||
Investments in affiliated securities | 2,487,949 | 3,747,848 | ||||||
Foreign currency | 2,741 | 27 | ||||||
Shares Outstanding^ | 800,000 | 1,000,000 | ||||||
Net Asset Value, Offering and Redemption Price per Share | $ | 28.66 | $ | 51.00 |
^ No par value, unlimited number of shares authorized
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
For the Year Ended September 30, 2022
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment loss | $ | (32,005 | ) | $ | (61,969 | ) | ||
Net realized gain on investments and In-Kind Redemptions | 3,739,077 | 6,795,041 | ||||||
Net change in unrealized appreciation/depreciation of investments and foreign currency and foreign currency translation | (24,627,273 | ) | 3,808,116 | |||||
Net increase (decrease) in net assets resulting from operations | (20,920,201 | ) | 10,541,188 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | — | (138,689 | ) | |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net decrease in net assets derived from net change in outstanding shares | (10,310,485 | ) | (2,762,775 | ) | ||||
Transaction Fees (See Note 1) | 21 | — | ||||||
Net decrease in net assets from capital share transactions | (10,310,464 | ) | (2,762,775 | ) | ||||
Total increase (decrease) in net assets | (31,230,665 | ) | 7,639,724 | |||||
NET ASSETS | ||||||||
Beginning of Year | 54,155,215 | 46,515,491 | ||||||
End of Year | $ | 22,924,550 | $ | 54,155,215 |
Summary of share transactions is as follows:
Year Ended | Year Ended | |||||||||||||||
September 30, 2022 | September 30, 2021 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 150,000 | $ | 6,614,280 | 250,000 | $ | 13,029,895 | ||||||||||
Transaction Fees (See Note 1) | — | 21 | — | — | ||||||||||||
Shares Redeemed | (400,000 | ) | (16,924,765 | ) | (300,000 | ) | (15,792,670 | ) | ||||||||
Net Transactions in Fund Shares | (250,000 | ) | $ | (10,310,464 | ) | (50,000 | ) | $ | (2,762,775 | ) | ||||||
Beginning Shares | 1,050,000 | 1,100,000 | ||||||||||||||
Ending Shares | 800,000 | 1,050,000 |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment income | $ | 270,337 | $ | 952,021 | ||||
Net realized gain (loss) on investments and In-Kind Redemptions | (12,535,657 | ) | 72,924,518 | |||||
Net change in unrealized appreciation/depreciation of investments and foreign currency and foreign currency translation | (19,860,385 | ) | (35,254,072 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (32,125,705 | ) | 38,622,467 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | (2,457,762 | ) | (1,207,000 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net decrease in net assets derived from net change in outstanding shares | (14,860,700 | ) | (58,836,885 | ) | ||||
Transaction Fees (See Note 1) | 17,554 | 150,154 | ||||||
Net decrease in net assets from capital share transactions | (14,843,146 | ) | (58,686,731 | ) | ||||
Total decrease in net assets | (49,426,613 | ) | (21,271,264 | ) | ||||
NET ASSETS | ||||||||
Beginning of Year | 100,427,342 | 121,698,606 | ||||||
End of Year | $ | 51,000,729 | $ | 100,427,342 |
Summary of share transactions is as follows:
Year Ended | Year Ended | |||||||||||||||
September 30, 2022 | September 30, 2021 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 50,000 | $ | 4,398,985 | 1,800,000 | $ | 164,928,820 | ||||||||||
Transaction Fees (See Note 1) | — | 17,554 | — | 150,154 | ||||||||||||
Shares Redeemed | (250,000 | ) | (19,259,685 | ) | (2,400,000 | ) | (223,765,705 | ) | ||||||||
Net Transactions in Fund Shares | (200,000 | ) | $ | (14,843,146 | ) | (600,000 | ) | $ | (58,686,731 | ) | ||||||
Beginning Shares | 1,200,000 | 1,800,000 | ||||||||||||||
Ending Shares | 1,000,000 | 1,200,000 |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
For a capital share outstanding throughout the year
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
Net Asset Value, Beginning of Year | $ | 51.58 | $ | 42.29 | $ | 35.92 | $ | 39.05 | $ | 36.14 | ||||||||||
Income (Loss) from Investment Operations: | ||||||||||||||||||||
Net investment income (loss) 1 | (0.03 | ) | (0.03 | ) | 0.26 | 0.28 | 0.15 | |||||||||||||
Net realized and unrealized gain (loss) on investments | (22.89 | ) | 9.45 | 6.34 | (3.11 | ) | 3.08 | |||||||||||||
Total from investment operations | (22.92 | ) | 9.42 | 6.60 | (2.83 | ) | 3.23 | |||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | — | (0.13 | ) | (0.23 | ) | (0.30 | ) | (0.13 | ) | |||||||||||
Net realized gains | — | — | — | — | (0.19 | ) | ||||||||||||||
Total distributions | — | (0.13 | ) | (0.23 | ) | (0.30 | ) | (0.32 | ) | |||||||||||
Net asset value, end of year | $ | 28.66 | $ | 51.58 | $ | 42.29 | $ | 35.92 | $ | 39.05 | ||||||||||
Total Return | (44.44 | )% | 22.28 | % | 18.58 | % | (7.23 | )% | 9.03 | % | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end of year (000’s) | $ | 22,925 | $ | 54,155 | $ | 46,515 | $ | 37,720 | $ | 50,771 | ||||||||||
Gross Expenses to Average Net Assets | 0.68 | % | 0.68 | % | 0.71 | %2 | 0.75 | % | 0.75 | % | ||||||||||
Net Investment Income (Loss) to Average Net | ||||||||||||||||||||
Assets | (0.09 | )% | (0.06 | )% | 0.70 | % | 0.83 | % | 0.42 | % | ||||||||||
Portfolio Turnover Rate | 28 | % | 14 | % | 104 | % | 38 | % | 42 | % |
1 | Calculated based on average shares outstanding during the year. |
2 | Effective April 7, 2020, the Fund’s expense ratio was reduced to 0.68%. |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
Net Asset Value, Beginning of Year | $ | 83.69 | $ | 67.61 | $ | 41.50 | $ | 47.49 | 44.37 | |||||||||||
Income (Loss) from Investment Operations: | ||||||||||||||||||||
Net investment income 1 | 0.25 | 0.74 | 0.25 | 0.52 | 0.74 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | (30.82 | ) | 15.96 | 26.26 | (5.87 | ) | 2.98 | |||||||||||||
Total from investment operations | (30.57 | ) | 16.70 | 26.51 | (5.35 | ) | 3.72 | |||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | (2.14 | ) | (0.72 | ) | (0.41 | ) | (0.65 | ) | (0.59 | ) | ||||||||||
Net realized gains | — | — | — | — | (0.03 | ) | ||||||||||||||
Total distributions | (2.14 | ) | (0.72 | ) | (0.41 | ) | (0.65 | ) | (0.62 | ) | ||||||||||
Capital Share Transactions: | ||||||||||||||||||||
Transaction fees added to paid-in capital | 0.02 | 0.10 | 0.01 | 0.01 | 0.02 | |||||||||||||||
Net asset at end of year | $ | 51.00 | $ | 83.69 | $ | 67.61 | $ | 41.50 | 47.49 | |||||||||||
Total Return | (37.58 | )% | 24.91 | % | 64.12 | % | (11.26 | )% | 8.38 | % | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end of year (000’s) | $ | 51,001 | $ | 100,427 | $ | 121,699 | $ | 83,000 | $ | 130,609 | ||||||||||
Gross Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||
Net Investment Income to Average Net Assets | 0.33 | % | 0.87 | % | 0.51 | % | 1.22 | % | 1.48 | % | ||||||||||
Portfolio Turnover Rate | 53 | % | 89 | % | 53 | % | 38 | % | 42 | % |
1 | Calculated based on average shares outstanding during the year. |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
September 30, 2022
NOTE 1 – ORGANIZATION
Wedbush ETFMG Global Cloud Technology ETF (“IVES”) and Wedbush ETFMG Video Game Tech ETF (“GAMR”) (each a “Fund”, or collectively the “Funds”) are a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the U.S. Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”).
The Wedbush ETFMG Global Cloud Technology ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Dan Ives Global Cloud Technology Prime Index (the “Index”). The Index is designed to include the securities of companies across the globe that are: i) engaged in providing infrastructure, equipment, connectivity, data back-up and storage services, and data center management for enterprise- based software applications, or ii) engaged in providing cloud-based software platforms that enable businesses to move data and software applications onto the cloud - cloud-enabling Software as a Service (SaaS) technologies. These companies are known collectively as “Cloud Technology Companies.” The Cloud Technology Companies will have a minimum market capitalization of $200 million and a maximum market capitalization of $10 billion.
Effective April 17, 2020, the name ETFMG Video Game Tech ETF has changed to the Wedbush ETFMG Video Game Tech ETF.
The following table is a summary of the Strategy Commencement Date and Strategy of the Funds:
Fund Ticker |
Strategy Commencement Date |
Strategy |
Wedbush ETFMG Global Cloud Technology ETF |
4/7/2020 |
Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Dan Ives Global Cloud Technology Prime™ Index NTR. |
Wedbush ETFMG Video Game Tech ETF |
3/8/2016 |
Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the EEFund Video Game Tech™ Index. |
The Funds currently offer one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Funds have equal rights and privileges.
Shares of the Funds are listed and traded on the NASDAQ Stock Market, LLC. Market prices for the Shares may be different from their net asset value (“NAV”). The Funds issue and redeem Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Funds. Shares of the Funds may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Funds. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Funds may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR(S) for this reporting period, which is filed with the SEC. For more information about the underlying fund’s operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the SEC.
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by ETF Managers Group, LLC (the “Adviser”), using procedures adopted by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board. The use of fair value pricing by the Funds may cause the NAV of its shares to differ significantly from the NAV that would be calculated without regard to such considerations. As of September 30, 2022, the Wedbush ETFMG Video Game Tech ETF held one security that was fair valued by the Adviser.
As described above, the Funds utilize various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following is a summary of the inputs used to value the Funds’ net assets as of September 30, 2022:
Wedbush ETFMG Global Cloud Technology ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 22,718,792 | $ | — | $ | — | $ | 22,718,792 | ||||||||
Short Term Investments | 253,935 | — | — | 253,935 | ||||||||||||
ETFMG Sit Ultra Short ETF** | 2,403,750 | — | — | 2,403,750 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 3,620,896 | ||||||||||||
Total Investments in Securities | $ | 25,376,477 | $ | — | $ | — | $ | 28,997,373 |
Wedbush ETFMG Video Game Tech ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 50,501,683 | $ | — | $ | — | (1) | $ | 50,501,683 | |||||||
Short Term Investments | 447,887 | — | — | 447,887 | ||||||||||||
ETFMG Sit Ultra Short ETF** | 3,605,625 | — | — | 3,605,625 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 6,405,926 | ||||||||||||
Total Investments in Securities | $ | 54,555,195 | $ | — | $ | — | $ | 60,961,121 |
(1) | Includes a security valued at $0 with a cost of $463,445. |
^ | See Schedule of Investments for classifications by country and industry |
* | Certain investments that are measured at fair value used the net asset value per share (or its equivalent) practical expediant have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedules of Investments. |
** | Investment was purchased with collateral. |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
B. | Federal Income Taxes. The Funds have elected to be taxed as a “regulated investment company” and intend to distribute substantially all taxable income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, the Funds intend to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Funds’ next taxable year.
The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Funds have analyzed their tax position and have concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2022 tax returns. The Funds identify its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
As of September 30, 2022, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, generally a range of three to four years from the date of filing) as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Funds may be subject to income, withholding or other taxes imposed by foreign countries. |
D. | Foreign Currency Translations and Transactions. The Funds may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income, if any are generally declared and paid by the Funds on a quarterly basis. Net realized gains on securities of the Funds normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
G. | Share Valuation. The NAV per share of each Fund is calculated by dividing the sum of the value of the securities held by each Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of each Fund, rounded to the nearest cent. Each Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for each Fund is equal to each Fund’s NAV per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in Wedbush Global Cloud Technology ETF and the Wedbush Video Game Tech ETF may involve certain risks, as discussed in each Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Funds are not actively managed. Therefore, the Funds follow the securities included in its respective index during upturns as well as downturns. Because of its indexing strategy, the Funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Funds’ expenses, the Funds’ performance may be below that of its index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that the Funds’ or its underlying index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the Funds may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect lobal, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A wide spread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Funds.
A complete description of the principal risks is included in each Fund’s prospectus under the heading “Principal Investment Risks.”
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
Under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Funds, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”).
Wedbush Securities, Inc. (“Wedbush”) has entered into a licensing and marketing support agreement with Exchange Traded Managers Group LLC (“Parent”), the parent company of the Adviser (the “Wedbush Agreement”) . Pursuant to the Wedbush Agreement, Wedbush has agreed to (i) license the name Wedbush for the use of the Adviser; (ii) consult with the Adviser and prepare educational materials, research materials, and updates on regulation of the global video gaming technology and global cloud computing ecosystem; and (iii) provide support in connection with phone calls, appearances, and written content relating to the marketing of IVES and GAMR. Wedbush will also assumes the obligation of the Adviser to pay certain expenses of IVES and GAMR. Although Wedbush has agreed to be responsible for the payment of certain expenses of IVES and GAMR, the Adviser retains the ultimate obligation to the Funds to pay such expenses.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Advisory Fees: | |
Wedbush ETFMG Global Cloud Technology ETF | 0.68% |
Wedbush ETFMG Video Game Tech ETF | 0.75% |
The Adviser has entered into an agreement with its affiliate, ETFMG Financial LLC to serve as distributor to the Funds (the “Distributor”) . The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds.
In May, 2020, Wedbush acquired a minority, non-voting, equity interest in Parent. Wedbush is not however, an affiliate of the Funds, the Adviser, the Funds’ distributor or any of their respective affiliates. Wedbush does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Funds. Additionally, Wedbush is not involved in the maintenance of the Index and does not otherwise act in the capacity of an index provider.
Level ETF Ventures, LLC serves as the index provider for GAMR and IVES.
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Funds. The Adviser compensates the Administrator for these services under an administration agreement between the two parties.
The Adviser pays each independent Trustee a quarterly fee for service to the Funds. Each Trustee is also reimbursed by the Adviser for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
Each Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Funds may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Funds, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the year ended September 30, 2022, the Funds did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, during the year ended September 30, 2022:
Purchases | Sales | |||
Wedbush ETFMG Global Cloud Technology ETF | $11,092,907 | $12,095,559 | ||
Wedbush ETFMG Video Game Tech ETF | $44,481,926 | $51,233,536 |
The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the year ended September 30, 2022:
Purchases In- | Sales In- | |||||||
Kind | Kind | |||||||
Wedbush ETFMG Global Cloud Technology ETF | $ | 6,542,720 | $ | 15,699,800 | ||||
Wedbush ETFMG Video Game Tech ETF | $ | 3,014,096 | $ | 13,718,051 |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Funds’ determination of taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations during the year ended September 30, 2022.
NOTE 7 — SECURITIES LENDING
The Funds may lend up to 33 1/3% of the value of the securities in their portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”) . The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Funds receive compensation in the form of fees and earns interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Funds continue to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Funds. The Funds have the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations, either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Adviser; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Adviser. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
As of September 30, 2022, the value of the securities on loan and payable for collateral due to broker were as follows:
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, an investment with an overnight and continuous maturity, and ETFMG Sit Ultra Short ETF, as shown on the Schedule of Investments.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2022, the Funds’ most recent fiscal year end, were as follows:
Cost |
Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
Wedbush ETFMG Global Cloud Technology ETF | $ | 38,309,087 | $ | 2,083,156 | $ | (11,394,870 | ) | $ | (9,311,714 | ) | ||||||
Wedbush ETFMG Video Game Tech ETF | 93,159,459 | 770,505 | (32,968,843 | ) | (32,198,338 | ) |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the Funds’ most recent fiscal year end, the components of distributable earnings (loss) on a tax basis were as follows:
Undistributed Ordinary Income |
Undistributed Long-Term Gain |
Total Distributable Earnings |
Other Accumulated (Loss) |
Total Accumulated Gain |
||||||||||||||||
Wedbush ETFMG Global Cloud Technology ETF | $ | — | $ | — | $ | — | $ | (10,987,678 | ) | $ | (20,299,392 | ) | ||||||||
Wedbush ETFMG Video Game Tech ETF | — | — | — | (27,299,070 | ) | (59,497,408 | ) |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the Funds’ most recent fiscal year end, the Funds had accumulated capital loss carryovers of:
Capital Loss Carryover ST |
Capital Loss Carryover LT |
Expires |
||||||||||
Wedbush ETFMG Global Cloud Technology ETF | $ | (2,506,670 | ) | $ | (8,370,316 | ) | Indefinite | |||||
Wedbush ETFMG Video Game Tech ETF | (13,959,983 | ) | (13,174,970 | ) | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ending September 30, 2022, the Funds’ most recent fiscal year end.
Later Year Ordinary Loss | Post-October Loss | |||||||
Wedbush ETFMG Global Cloud Technology ETF | $ | (92,369 | ) | $ | — | |||
Wedbush ETFMG Video Game Tech ETF | (162,052 | ) | — |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2022, the following table shows the reclassifications made:
|
Total Distributable Earnings/(Loss) |
Paid-In Capital |
||||||
Wedbush ETFMG Global Cloud Technology ETF | $ | (4,954,548 | ) | $ | 4,954,548 | |||
Wedbush ETFMG Video Game Tech ETF | 1,090,255 | (1,090,255 | ) |
The tax charter of distributions paid during the year ended September 30, 2022, and the year ended September 30, 2021 were as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
|
From Ordinary Income |
From Capital Gains |
From Ordinary Income |
From Capital Gains |
||||||||||||
Wedbush ETFMG Global Cloud Technology ETF | $ | — | $ | — | $ | 138,689 | $ | — | ||||||||
Wedbush ETFMG Video Game Tech ETF | 2,457,762 | — | 1,207,000 | — |
NOTE 9 – INVESTMENTS IN AFFILIATES
Wedbush ETFMG Global Cloud Technology ETF
Wedbush ETFMG Global Cloud Technology ETF owned the following company during the year ended September 30, 2022. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the year ended September 30, 2022. Transactions during the year in the security were as follows:
Security Name | Value, at September 30, 2021 |
Purchases | Sales |
Realized Gain (Loss) |
Change in Unrealized Appreciation (Depreciation) |
Dividend Income |
Value, at September 30, 2022 |
Ending Shares |
||||||||||||||||||||||||
ETFMG Sit Ultra Short ETF | $ | 2,487,750 | $ | — | $ | — | $ | — | $ | (84,000 | ) | $ | — | $ | 2,403,750 | 50,000 |
Wedbush ETFMG Video Game Tech ETF
Wedbush ETFMG Video Game Tech ETF owned the following company during the year ended September 30, 2022. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the year ended September 30, 2022. Transactions during the year in the security were as follows:
Security Name | Value, at September 30, 2021 |
Purchases | Sales |
Realized Gain (Loss) |
Change in Unrealized Appreciation (Depreciation) |
Dividend Income |
Value, at September 30, 2022 |
Ending Shares |
||||||||||||||||||||||||
ETFMG Sit Ultra Short ETF | $ | 3,731,625 | $ | — | $ | — | $ | — | $ | (126,000 | ) | $ | — | $ | 3,605,625 | 75,000 |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 10 – LEGAL MATTERS
The Trust, the Adviser, and certain officers and affiliated persons of the Adviser (together with the Adviser, the “Adviser Defendants”) were named as defendants in an action filed December 21, 2021, in the Superior Court of New Jersey, Union County, captioned PureShares, LLC, d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. UNN-C-152-21 (the “NJ Action”). The NJ Action asserted breach of contract and other tort claims and sought damages in unspecified amounts and injunctive relief. On May 25, 2022, the court in the NJ Action dismissed with prejudice all claims asserted against the Trust, as well as all contract claims and all except one tort claim asserted against the Adviser Defendants.
As of September 30, 2022, there were no adjustments made to the accompanying financial statements based on the above legal matters.
NOTE 11 – SUBSEQUENT EVENTS
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.
Wedbush ETFMG TM ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of Wedbush ETFMG Video Game Tech ETF and Wedbush ETFMG Global Cloud Technology ETF :
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Wedbush ETFMG Video Game Tech ETF and Wedbush ETFMG Global Cloud Technology ETF (the “Funds”) (certain of the Funds comprising ETF Managers Trust), as of September 30, 2022, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the periods indicated therein, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of September 30, 2022, and the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor for one or more series of the Trust since 2013.
New York, New York
November 29, 2022
Wedbush ETFMG TM ETF
Six Months Ended September 30, 2022 (Unaudited)
As a shareholder of the Funds you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 for the period of time as indicated in the table below.
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
Fund Name |
Beginning Account Value April 1, 2022 |
Ending Account Value September 30, 2022 |
Expenses Paid During the Period^ |
Annualized Expense Ratio During the Period April 1, 2022 to September 30, 2022 |
||||||||||||
Wedbush ETFMG Global Cloud Technology ETF | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 708.90 | 2.91 | 0.68 | % | |||||||||
Hypothetical (5% annual) | 1,000.00 | 1,021.66 | 3.45 | 0.68 | % | |||||||||||
Wedbush ETFMG Video Game Tech ETF | ||||||||||||||||
Actual | 1,000.00 | 668.50 | 3.14 | 0.75 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,021.31 | 3.80 | 0.75 | % |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/365 (to reflect the one-half year period).
Wedbush ETFMG TM ETF
September 30, 2022 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2022, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Fund Name | Qualified Dividend Income |
Wedbush ETFMG Global Cloud Technology | 0.00% |
Wedbush ETFMG Video Game Tech ETF | 62.64% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2022 was as follows:
Fund Name | Dividends Received Deduction |
Wedbush ETFMG Global Cloud Technology | 0.00% |
Wedbush ETFMG Video Game Tech ETF | 4.48% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for each Fund were as follows:
Fund Name | Short-Term Capital Gain |
Wedbush ETFMG Global Cloud Technology | 0.00% |
Wedbush ETFMG Video Game Tech ETF | 0.00% |
During the year ended September 30, 2022, the Funds did not declare any long-term realized gains distributions.
Pursuant to Section 853 of the Internal Revenue Code the Fund designated the following amounts as foreign taxes paid for the year ended September 30, 2022. Foreign taxes paid for purposes of Section 853 may be less than actual foreign taxes paid for financial statement purposes.
Per Share | ||||||||||||||||||||
Gross | Gross | |||||||||||||||||||
Foreign | Foreign | Foreign | Foreign | Shares | ||||||||||||||||
Source | Taxes | Source | Taxes | Outstanding | ||||||||||||||||
Fund | Income | Passthrough | Income | Passthrough | at 9/30/22 | |||||||||||||||
Wedbush ETFMG Video Game Tech ETF | 770,396 | 93,273 | 0.77039600 | 0.09327300 | 1,000,000 |
Foreign taxes paid or withheld should be included to taxable income with an offsetting deduction from gross income or as a credit for taxes paid to foreign governments. Above figures may differ from those cited elsewhere in this report due to difference in the calculation of income and gains under GAAP purposes and Internal Revenue Service purposes.
Wedbush ETFMG TM ETF
SUPPLEMENTARY INFORMATION
September 30, 2022 (Unaudited) (Continued)
Shareholders are strongly advised to consult their own tax advisors with respect to their investments in the Funds.
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the Securities and Exchange Commission (“SEC”) on Part F of Form N-PORT. The Funds’ Part F of Form N-PORT is available on the website of the SEC at www.sec.gov and the Funds’ website at www.etfmgfunds.com. Each Fund’s portfolio holdings are posted on their website at www.etfmgfunds.com daily.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at (877) 756-7873, by accessing the SEC’s website at www.sec.gov, or by accessing the Funds’ website at www.etfmgfunds.com.
Information regarding how the Funds voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at (877) 756-7873 or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
Wedbush ETFMG TM ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
Wedbush ETFMG TM ETF
Board of Trustees (Continued)
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
Terry Loebs (1963) | Trustee (since 2014); Lead Independent Trustee (since 2020) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 17 | None |
Eric Wiegel (1960) | Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017- 2018). | 17 | None |
Wedbush ETFMG TM ETF
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S. Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
ETFMG Alternative Harvest ETF
MJ
ETFMG U.S. Alternative Harvest ETF
MJUS
ETFMG 2x Daily Alternative Harvest ETF
MJXL
ETFMG 2x Daily Inverse Alternative
Harvest ETF
MJIN
Annual Report
September 30, 2022
The funds are series of ETF Managers Trust.
ETFMG TM ETFs
TABLE OF CONTENTS
September 30, 2022
ETFMG TM ETFs
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these ETFs. The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
Market Overview
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and, in many cases, unprecedented volatility and severe losses due to the global pandemic caused by COVID-19. Some sectors of the economy and individual issuers have experienced particularly large losses because of these disruptions. In response to these disruptions, the U.S. government and the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, contributing to inflationary pressure and expectations for inflation. Further, Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict have increased volatility and uncertainty in the financial markets and adversely affect regional and global economies. The full extent and duration of these conditions and the totality of repercussions are impossible to predict but could continue to result in significant market disruptions and may continue to negatively affect global supply chains, inflation and global growth. These and related events have impacted the ETFs’ performance, among other factors, and the value of an investment in the ETFs. We encourage you to talk with your financial advisor and visit etfmg.com for further insight about investing in today’s markets.
Performance Overview
During the fiscal period ended September 30, 2022, the S&P 500, a broad measure of US listed companies, returned -15.47%. Below is a performance overview for each Fund for the same 1 year period.
ETFMG Alternative Harvest ETF (MJ)
Over the period, the total return for the ETFMG Alternative Harvest ETF (“MJ”), was -67.06%, while the total return for the Prime Alternative Harvest Index (the “Index”) was -67.42%. The best performers in MJ, on the basis of contribution to return, were Arena Pharmaceuticals Inc, British American Tobacco Plc, Swedish Match Ab, Vector Group Ltd and Jazz Pharmaceuticals Plc, while the worst performers were Canopy Growth Corp, Tilray Brands Inc, Aurora Cannabis Inc, Growgeneration Corp, and Sndl Inc.
During the reporting period, MJ saw an average approximate allocation of 51.75% to the Health Care sector, 7.51% to Consumer Staples and 4.33% to Financials. The portfolio holdings of MJ were exposed predominately to Canada at 44.60%, while 20.44% were exposed to the United States, and 2.65% to Australia.
ETFMG U.S. Alternative Harvest ETF (MJUS)
The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022. The ETFMG U.S. Alternative Harvest ETF (“MJUS”), seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime U.S. Alternative Harvest Index (the “MJUS Index”).
Over the period, the total return for MJUS was -71.97%, while the total return the for the MJUS Index was -70.80%. The best performers in MJUS, on the basis of contribution to return were, Riv Capital Inc, Ceres Acquisition Corp - A, Goodness Growth Holdings Inc, Glass House Brands Inc. and Cansortium Inc while the worst performers were Trulieve Cannabis Corp, Curaleaf Holdings Inc, Innovative Industrial Proper and Green Thumb Industries Inc and Hydrofarm Holdings Group Inc.
During the reporting period, MJUS saw an allocation of 68.14% to the Health Care sector, 22.51% to Real Estate and 2.23% to Financials.
The portfolio holdings of MJUS were primarily exposed to the United States at 92.53% exposure and Canada at 4.37%.
ETFMG 2x Daily Alternative Harvest ETF (MJXL) and
ETFMG 2X Daily Inverse Alternative Harvest ETF (MJIN)
Operational Review
The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022. MJXL and MJIN (collectively, the “Funds”) are leveraged and seek daily investment results, before fees and expenses, of 200% or -200%, respectively, of the performance of the Index. The Funds, as stated above, seek daily investment results. They do not seek to track a multiple of the Index for periods of longer than one day and the performance of the ETFs over longer periods may not correlate to the Index performance. The ETFs should not be held by investors for long periods and should be used as short-term trading vehicles. These products are not suitable for all investors and should be utilized only by sophisticated investors who understand the risks associated with the use of leverage, the consequences of seeking daily leveraged investment results and intend to actively monitor and manage their investments.
MJXL attempts to provide investment results that correlate to 200% of the daily return of the Index, meaning MJXL attempts to move in the same direction as the Index. MJIN attempts to provide investment results that correlate to -200% of the daily return of a benchmark, meaning that MJIN attempts to move in the opposite, or inverse, direction of the Index.
In seeking to achieve the Funds’ daily investment results, ETF Managers Group LLC (the “Adviser”) relies upon quantitative analysis to generate orders resulting in repositioning the Funds’ investments in accordance with its daily investment objective. Using this approach, the Adviser determines the type, quantity and mix of investment positions that it believes in combination should produce daily returns consistent with the Funds’ objectives. As a consequence, if the Funds are performing as designed, the return of the Index will dictate the return for the Funds. Each MJIN and MJXL pursues its investment objective regardless of market conditions and does not take defensive positions. Each MJIN and MJXL has a clearly articulated goal which requires it to seek economic exposure significantly in excess of its net assets. To meet its objectives, each of the Funds invests in some combination of financial instruments, including significant investment in derivatives primarily comprised of swap agreements. The Adviser uses these types of investments to produce economically “leveraged” investment results. Leveraging allows the Adviser to generate a greater positive or negative return than what would be generated on the invested capital without leverage, thus changing small market movements into larger changes in the value of the investments of the Funds.
The Funds use of certain investment techniques, including investments in derivatives, may be considered aggressive. Investments in derivatives in general, are subject to market risks that may cause their prices to fluctuate dramatically over time. Additionally, use of such instruments will most likely increase the volatility of the Funds. The use of derivatives may expose the Funds to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives, such as counterparty risk. The use of derivatives may also result in larger losses or smaller gains than otherwise would be the case.
Because each of the Funds seek daily investment results of the Index, a comparison of the return of the Funds to the Index does not provide an indication of whether either or the Funds met its respective investment objective. To determine if each of the Funds met its daily investment goals, the Adviser performs quantitative analysis seeking to determine the expected performance of each of the Funds as compared to Index. The quantitative analysis includes predictive models as well as stress-testing and back-testing. Factors Affecting Performance of the Funds:
Leverage – Each ETF seeks daily investment results (before fees and expenses) of 200% or -200% of the performance of the Index. The use of leverage magnifies an ETF’s gains or losses and increases the investment’s risk and volatility.
Index Performance – The daily performance of the Index, and the factors and market conditions implicitly affecting the Index, are the primary factors driving ETF performance. Given the daily goals, the daily Index returns are most important. The market conditions that affected the Index during the past year are described in the Performance Overview section.
Volatility and Compounding – The goal of the ETFs is to provide the specified multiple of the daily return of the Index. Over periods longer than a single day, an ETF should not be expected to provide the multiple of the return of the underlying index. Due to the effects of compounding, a universal mathematical concept that applies to all investments, returns of the ETFs over longer periods are greater or less than the ETF’s daily stated goal. Periods of high volatility that lack a clear trend hurt an ETF’s performance while trending, low volatility markets enhance an ETF’s performance.
Cost of Financing – In order to attain leveraged or inverse leveraged exposure, an ETF receives OBFR plus or minus a spread as applied to the borrowed portion of the ETF’s exposure. The spread varies by ETF and counterparty and is a function of market demand, hedging costs, access to balance sheet, borrow volatility, current counterparty exposure and administrative costs associated with the swap counterparty. An increase in interest rates which effects the cost of financing will further impact an ETF’s performance and ability to track the Index.
Fees, Expenses, and Transaction Costs – Fees and expenses are listed in each ETF’s prospectus and may be higher than many traditional index funds’ fees, which cause a greater negative impact on ETF performance. Transactions costs are not included in the expense ratio of the ETFs. Transaction costs can be higher due to the ETF’s use of derivatives, shorting securities, frequent creation and redemption activity, or trading securities that are comparatively less liquid.
Swap Agreements:
During the reporting period, the Funds invested in swap agreements in order to gain the desired exposure to the Index. These derivatives generally tracked the performance of MJ and the Funds were generally negatively impacted from financing rates associated with their use. The Funds entered into swap agreements with counterparties that the Adviser determined to be significant global financial institutions.
If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Funds may decline. The Funds have sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Funds, marked to market daily, in an amount approximately equal to the amount the counterparty owed each of the Funds, subject to certain minimum thresholds.
Performance Review
The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
ETFMG 2X Daily Alternative Harvest ETF (MJXL)
MJXL seeks to provide daily investment results, before fees and expenses, that correspond to two times (2x) the return of the Index for a single day, not for any other period. Over the reporting period, the Index had a total return of – 67.42% and volatility of 45.5%. Given the daily investment objectives of MJXL and the path dependency of returns for longer periods, the return of the Index for the reporting period alone should not generate expectations of MJXL performance for the same period. MJXL had a total return of -91.43% for the reporting period and volatility of 93.5%. For the reporting period MJXL had an average daily volume of 17,808 shares and an average daily statistical correlation of 99.1% to the return of the Index.
ETFMG 2X Daily Inverse Alternative Harvest ETF (MJIN)
The following information pertains to the fiscal period from October 6, 2021 to September 30, 2022. MJIN seeks to provide daily investment results, before fees and expenses, that correspond to two times (2x) the return of the Index for a single day, not for any other period. Over the reporting period, the Index had a total return of -67.19% and volatility of 45.8%. Given the daily investment objectives of MJIN and the path dependency of returns for longer periods, the return of the Index for the reporting period alone should not generate expectations of MJIN performance for the same period. MJIN had a total return of 199.05% for the reporting period and volatility of 95.5%. For the reporting period MJIN had an average daily volume of 13,506 shares and an average daily statistical correlation of -98.8% to the return of the Index.
We thank you for your interest in the Fund. You can find further details about MJ, MJUS, MJXL and MJIN by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
Growth of $10,000 (Unaudited)
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
5 Year Return |
Since Inception (12/03/15) |
Value of $10,000 (9/30/2022) |
||||||||||||
ETFMG Alternative Harvest ETF (NAV) | -67.06 | % | -29.39 | % | -17.86 | % | $ | 2,611 | ||||||||
ETFMG Alternative Harvest ETF(Market) | -67.27 | % | -29.56 | % | -18.40 | % | $ | 2,495 | ||||||||
S&P 500 Index | -15.47 | % | 9.24 | % | 10.58 | % | $ | 19,868 | ||||||||
Prime Alternative Harvest Index* | -67.42 | % | -30.19 | % | -18.42 | % | $ | 2,490 |
* On December 26, 2017, the Fund’s investment objective and principal investment strategy were substantially revised; therefore, the performance and average annual total returns shown for periods prior to December 26, 2017 is likely to have differed had the Fund’s current investment strategy been in effect during those periods. The Fund’s prior investment objective sought to provide investment results that corresponded to the performance of the Solactive Latin America Real Estate Index, which tracked equities with primary listings in the Latin America region that derived most of their income from real estate and real estate services. The Fund began tracking the Prime Alternative Harvest Index on December 26, 2017.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on December 3, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Alternative Harvest ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments |
||||
1 | ETFMG U.S. Alternative Harvest ETF** | 17.71% | |||
2 | Canopy Growth Corp. | 6.32% | |||
3 | ETFMG Sit Ultra Short ETF** | 6.09% | |||
4 | SNDL, Inc. | 5.77% | |||
5 | Cronos Group, Inc. | 5.52% | |||
6 | Tilray Brands, Inc. | 4.57% | |||
7 | Aurora Cannabis, Inc. | 2.69% | |||
8 | Organigram Holdings, Inc. | 2.48% | |||
9 | GrowGeneration Corp. | 2.17% | |||
10 | Incannex Healthcare, Ltd. | 1.82% |
Top Ten Holdings= 55.14% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
** Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.
ETFMG U.S. Alternative Harvest ETF
Growth of $10,000 (Unaudited)
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
Since Inception (5/12/2021) |
Value of $10,000 (9/30/2022) |
|||||||||
ETFMG U.S. Alternative Harvest ETF (NAV) | -71.97 | % | -66.86 | % | $ | 2,163 | ||||||
ETFMG U.S. Alternative Harvest ETF (Market) | -72.02 | % | -66.93 | % | $ | 2,157 | ||||||
S&P 500 Index | -15.47 | % | -7.23 | % | $ | 9,011 | ||||||
Prime US Alternative Harvest Index NTR | -70.80 | % | -65.42 | % | $ | 2,294 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on May 12, 2021, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG U.S. Alternative Harvest ETF
Top Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments |
||||
1 | Innovative Industrial Properties, Inc. | 19.74% | |||
2 | AFC Gamma, Inc. | 1.94% | |||
3 | GrowGeneration Corp. | 1.57% | |||
4 | WM Technology, Inc. | 0.90% | |||
5 | Hydrofarm Holdings Group, Inc. | 0.59% | |||
6 | Charlottes Web Holdings, Inc. | 0.48% | |||
7 | Flora Growth Corp. | 0.38% | |||
8 | Bright Green Corp. | 0.27% | |||
9 | Power REIT | 0.23% |
Top Holdings = 26.10% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG 2x Daily Alternative Harvest ETF
Growth of $10,000 (Unaudited)
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
Since Inception (7/6/2021) |
Value of $10,000 (9/30/2022) |
|||||||||
ETFMG 2x Daily Alternative Harvest ETF (NAV) | -91.43 | % | -92.05 | % | $ | 438 | ||||||
ETFMG 2x Daily Alternative Harvest ETF (Market) | -90.45 | % | -91.40 | % | $ | 483 | ||||||
S&P 500 Index | -15.47 | % | -13.08 | % | $ | 8,410 | ||||||
Prime Alternative Harvest Index NTR | -67.42 | % | -69.02 | % | $ | 2,350 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on July 6, 2021, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG 2x Daily Inverse
Alternative Harvest ETF
Growth of $10,000 (Unaudited)
Average Cumulative Returns Period Ended September 30, 2022 |
Since Inception (10/5/2021) |
Value of $10,000 (9/30/2022) |
||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF (NAV) | 199.05 | % | $ | 29,905 | ||||
ETFMG 2x Daily Inverse Alternative Harvest ETF (Market) | 193.91 | % | $ | 29,391 | ||||
S&P 500 Index | -16.23 | % | $ | 8,377 | ||||
Prime Alternative Harvest Index NTR | -67.19 | % | $ | 3,281 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on October 5, 2021, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG TM ETFs
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
MJ
The possession and use of marijuana, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments. Use of marijuana is regulated by both the federal government and state governments, and state and federal laws regarding marijuana often conflict. Even in those states in which the use of marijuana has been legalized, its possession and use remains a violation of federal law. Federal law criminalizing the use of marijuana pre- empts state laws that legalizes its use for medicinal and recreational purposes. Cannabis companies and pharmaceutical companies may never be able to legally produce and sell products in the United States or other national or local jurisdictions.
The Fund’s investments will be concentrated in an industry or group of industries to the extent that the Index is so concentrated. In such event, the value of the Fund’s shares may rise and fall more than the value of shares of a fund that invests in securities of companies in a broader range of industries. The consumer staples sector may be affected by the permissibility of using various product components and production methods, marketing campaigns and other factors affecting consumer demand. Tobacco companies, in particular, may be adversely affected by new laws, regulations and litigation. The consumer staples sector may also be adversely affected by changes or trends in commodity prices, which may be influenced or characterized by unpredictable factors.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather- related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG Financial is not affiliated with Prime Indexes.
ETFMG TM ETFs
The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.
MJUS
The possession and use of marijuana, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments. Use of marijuana is regulated by both the federal government and state governments, and state and federal laws regarding marijuana often conflict. Even in those states in which the use of marijuana has been legalized, its possession and use remains a violation of federal law. Federal law criminalizing the use of marijuana pre- empts state laws that legalizes its use for medicinal and recreational purposes. Cannabis companies and pharmaceutical companies may never be able to legally produce and sell products in the United States or other national or local jurisdictions.
The Fund’s investments will be concentrated in an industry or group of industries to the extent that the Index is so concentrated. In such event, the value of the Fund’s shares may rise and fall more than the value of shares of a fund that invests in securities of companies in a broader range of industries. The consumer staples sector may be affected by the permissibility of using various product components and production methods, marketing campaigns and other factors affecting consumer demand. Tobacco companies, in particular, may be adversely affected by new laws, regulations and litigation. The consumer staples sector may also be adversely affected by changes or trends in commodity prices, which may be influenced or characterized by unpredictable factors.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather- related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
The Fund is a recently organized, diversified management investment company with limited operating history. ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
ETFMG TM ETFs
The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.
MJXL and MJIN
The possession and use of marijuana, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments. Use of marijuana is regulated by both the federal government and state governments, and state and federal laws regarding marijuana often conflict. Even in those states in which the use of marijuana has been legalized, its possession and use remains a violation of federal law. Federal law criminalizing the use of marijuana pre- empts state laws that legalizes its use for medicinal and recreational purposes. Cannabis companies and pharmaceutical companies may never be able to legally produce and sell products in the United States or other national or local jurisdictions.
The Fund’s investments will be concentrated in an industry or group of industries to the extent that the Index is so concentrated. In such event, the value of the Fund’s shares may rise and fall more than the value of shares of a fund that invests in securities of companies in a broader range of industries. The consumer staples sector may be affected by the permissibility of using various product components and production methods, marketing campaigns and other factors affecting consumer demand. Tobacco companies, in particular, may be adversely affected by new laws, regulations and litigation. The consumer staples sector may also be adversely affected by changes or trends in commodity prices, which may be influenced or characterized by unpredictable factors.
The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.
Investing in an ETFMG 2x Daily Leveraged ETF may be more volatile than investing in broadly diversified funds. The use of leverage by an ETF increases the risk to the ETF. The ETFMG 2x Daily Leveraged ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leveraged, or daily inverse leveraged, investment results and intend to actively monitor and manage their investment.
The use of derivatives such as swaps are subject to additional risks that may cause prices to fluctuate over time and include the effects of compounding, market volatility, leverage risk, aggressive investment techniques risk, counterparty risk, and intra- day investment risk. Please see the summary and full prospectuses for a more complete description of these and other risks of investing in the Fund.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather- related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETFMG TM ETFs
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
The Fund is a recently organized, diversified management investment company with limited operating history. ETF Managers Group LLC is the investment advisor to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.
ETFMG TM ETFs
As of September 30, 2022
ETFMG Alternative Harvest ETF |
ETFMG U.S. Alternative Harvest ETF |
ETFMG 2x Daily Alternative Harvest ETF |
ETFMG 2x Daily Inverse Alternative Harvest ETF |
|||||||||
As a percent of Net Assets: | ||||||||||||
Australia | 2.7 | % | — | % | — | % | — | % | ||||
Canada | 38.5 | 0.9 | — | — | ||||||||
Denmark | 0.7 | — | — | — | ||||||||
Ireland | 0.8 | — | — | — | ||||||||
Israel | 2.6 | — | — | — | ||||||||
Mexico | 0.0 | * | — | — | — | |||||||
Sweden | 0.9 | — | — | — | ||||||||
United Kingdom | 1.7 | — | — | — | ||||||||
United States | 25.3 | 28.5 | — | — | ||||||||
Exchange Traded Funds | 34.7 | — | — | — | ||||||||
Short-Term and other Net Assets (Liabilities) | (7.9 | ) | 70.6 | 100.0 | 100.0 | |||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
ETFMG Alternative Harvest ETF
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 73.2% | ||||||||
Australia - 2.7% | ||||||||
Pharmaceuticals - 2.7% (g) | ||||||||
Incannex Healthcare, Ltd. (a) | 48,881,193 | $ | 8,598,412 | |||||
Canada - 38.5% | ||||||||
Food Products - 0.6% | ||||||||
Village Farms International, Inc. (a)(b) | 961,081 | 1,835,665 | ||||||
Pharmaceuticals - 37.9% (g) | ||||||||
Aurora Cannabis, Inc. (a)(b) | 10,422,672 | 12,715,660 | ||||||
Auxly Cannabis Group, Inc. (a)(b) | 37,661,739 | 1,226,900 | ||||||
Canopy Growth Corp. (a)(b) | 10,963,644 | 29,930,748 | ||||||
Charlottes Web Holdings, Inc. (a)(b)(f) | 7,608,937 | 3,139,750 | ||||||
Cronos Group, Inc. (a)(b) | 9,264,592 | 26,126,149 | ||||||
HEXO Corp. (a)(b) | 22,940,311 | 3,982,438 | ||||||
High Tide, Inc. (a)(b) | 2,955,975 | 4,087,242 | ||||||
MediPharm Labs Corp. (a)(b) | 5,469,051 | 277,145 | ||||||
Organigram Holdings, Inc. (a)(b) | 13,461,740 | 11,733,253 | ||||||
SNDL, Inc. (a)(b)(f) | 12,523,678 | 27,301,618 | ||||||
The Valens Co., Inc. (a)(b) | 3,877,556 | 2,638,653 | ||||||
Total Pharmaceuticals | 123,159,556 | |||||||
Total Canada | 124,995,221 | |||||||
Denmark - 0.7% | ||||||||
Tobacco - 0.7% | ||||||||
Scandinavian Tobacco Group AS (h) | 160,914 | 2,343,768 | ||||||
Ireland - 0.8% | ||||||||
Pharmaceuticals - 0.8% (g) | ||||||||
Jazz Pharmaceuticals PLC (a) | 20,154 | 2,686,327 | ||||||
Israel - 2.6% | ||||||||
Pharmaceuticals - 2.6% (g) | ||||||||
Intercure, Ltd. (a)(b) | 1,851,339 | 8,349,539 | ||||||
Mexico - 0.0% (d) | ||||||||
Construction & Engineering - 0.0% (d) | ||||||||
Empresas ICA SAB de CV (a)(c) | 155,893 | — | ||||||
Sweden - 0.9% | ||||||||
Tobacco - 0.9% | ||||||||
Swedish Match AB | 286,991 | 2,844,657 | ||||||
United Kingdom - 1.7% | ||||||||
Tobacco - 1.7% | ||||||||
British American Tobacco PLC | 77,791 | 2,802,446 | ||||||
Imperial Brands PLC | 136,584 | 2,828,915 | ||||||
Total Tobacco | 5,631,361 |
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
United States - 25.3% | ||||||||
Biotechnology - 0.2% | ||||||||
Corbus Pharmaceuticals Holdings, Inc. (a) | 4,710,319 | $ | 777,203 | |||||
Chemicals - 1.5% | ||||||||
Mativ Holdings, Inc. (b) | 152,183 | 3,360,201 | ||||||
Scotts Miracle-Gro Co. (b) | 37,947 | 1,622,234 | ||||||
Total Chemicals | 4,982,435 | |||||||
Interactive Media & Services - 0.2% | ||||||||
Leafly Holdings, Inc. (a)(b) | 932,936 | 633,464 | ||||||
Machinery - 1.3% | ||||||||
Agrify Corp. (a)(b) | 1,104,323 | 480,381 | ||||||
Hydrofarm Holdings Group, Inc. (a) | 1,994,258 | 3,868,860 | ||||||
Total Machinery | 4,349,241 | |||||||
Pharmaceuticals - 7.2% (g) | ||||||||
Tilray Brands, Inc. (a)(b) | 7,862,260 | 21,621,215 | ||||||
Zynerba Pharmaceuticals, Inc. (a) | 2,258,970 | 1,653,566 | ||||||
Total Pharmaceuticals | 23,274,781 | |||||||
Real Estate Investment Trusts (REITs) - 6.2% | ||||||||
AFC Gamma, Inc. (b) | 489,357 | 7,487,161 | ||||||
Chicago Atlantic Real Estate Finance, Inc. (b) | 458,709 | 6,609,997 | ||||||
Innovative Industrial Properties, Inc. (b) | 66,195 | 5,858,258 | ||||||
Total Real Estate Investment Trusts (REITs) | 19,955,416 | |||||||
Software - 1.8% | ||||||||
WM Technology, Inc. (a) | 3,652,945 | 5,881,241 | ||||||
Specialty Retail - 3.2% | ||||||||
GrowGeneration Corp. (a)(b) | 2,938,255 | 10,283,893 | ||||||
Tobacco - 3.7% | ||||||||
22nd Century Group, Inc. (a)(b) | 1,595,099 | 1,479,135 | ||||||
Altria Group, Inc. | 68,853 | 2,780,284 | ||||||
Philip Morris International, Inc. | 31,096 | 2,581,279 | ||||||
Turning Point Brands, Inc. | 125,780 | 2,670,309 | ||||||
Vector Group, Ltd. (b) | 273,237 | 2,407,218 | ||||||
Total Tobacco | 11,918,225 | |||||||
Total United States | 82,055,899 | |||||||
TOTAL COMMON STOCKS (Cost $811,017,606) | 237,505,184 | |||||||
EXCHANGE TRADED FUNDS - 25.8% | ||||||||
ETFMG U.S. Alternative Harvest ETF (f) | 38,873,845 | 83,831,447 | ||||||
TOTAL EXCHANGE TRADED FUNDS (Cost $109,853,918) |
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 45.5% | ||||||||
ETFMG Sit Ultra Short ETF (f) | 600,000 | $ | 28,845,000 | |||||
Mount Vernon Liquid Assets Portfolio, LLC, 3.18% (e) | 118,945,523 | 118,945,523 | ||||||
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $148,794,320) | 147,790,523 | |||||||
SHORT-TERM INVESTMENTS - 1.3% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (e) | 4,252,988 | 4,252,988 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $4,252,988) | 4,252,988 | |||||||
Total Investments (Cost $1,073,918,832) - 145.8% | 473,380,142 | |||||||
Liabilities in Excess of Other Assets - (45.8)% | (148,650,407 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 324,729,735 |
Percentages are stated as a percent of net assets.
PLC Public Limited Company
(a) | Non-income producing security. |
(b) | This security or a portion of this security was out on loan at September 30, 2022. |
(c) | Value determined using significant unobservable inputs. The value of these securities total $0, which represents 0.0% of total net assets. Classified as Level 3 in the fair value hierarchy. |
(d) | Amount is less than 0.05%. |
(e) | The rate shown is the annualized seven-day yield at period end. |
(f) | Affiliated Security. Please refer to Note 9 of the Notes to Financial Statements. |
(g) | As of September 30, 2022, the Fund had a significant portion of its assets invested in the Pharmaceutical industry. |
(h) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. This security may be resold in transitions exempt from registration to qualified institutional investors. At September 30, 2022, the market value of these securities total $2,343,768, which represents 0.7% of total net assets. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG U.S. Alternative Harvest ETF
Schedule of Investments
September 30, 2022
The accompanying notes are an integral part of these financial statements.
ETFMG U.S. Alternative Harvest ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
SHORT-TERM INVESTMENTS - 82.8% | ||||||||
Money Market Funds - 5.2% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (c) | 4,429,886 | $ | 4,429,886 | |||||
U.S. Treasury Bills - 77.6% (d) | ||||||||
2.66%, 11/17/2022 | 3,705,000 | 3,692,327 | ||||||
2.70%, 11/25/2022 | 18,750,000 | 18,673,817 | ||||||
2.84%, 12/01/2022 | 23,500,000 | 23,388,791 | ||||||
2.94%, 12/08/2022 | 11,075,000 | 11,014,565 | ||||||
2.77%, 12/15/2022 | 5,450,000 | 5,419,120 | ||||||
3.15%, 12/22/2022 | 2,775,000 | 2,755,462 | ||||||
3.22%, 01/05/2023 | 975,000 | 966,800 | ||||||
Total U.S. Treasury Bills | 65,910,882 | |||||||
TOTAL SHORT TERM INVESTMENTS (Cost $70,337,420) | 70,340,768 | |||||||
Total Investments (Cost $102,737,604) - 112.7% | 95,783,107 | |||||||
Liabilities in Excess of Other Assets - (12.7)% | (10,816,511 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 84,966,596 |
Percentages are stated as a percent of net assets.
(a) | Non-income producing security. |
(b) | All or a portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the seven-day yield at September 30, 2022. |
(d) | The rate shown is the effective yield at September 30, 2022. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG U.S. Alternative Harvest ETF
Schedule of Total Return Swaps
September 30, 2022
Long Total Return Equity Swaps |
Counterparty | Payment Frequency |
Financing Rate | Expiration Date |
Notional Amount |
Unrealized Appreciation/ (Depreciation) |
||||||||||
Columbia Care | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | May 16, 2023 | $ | 381,630 | $ | — | ||||||||
Columbia Care* | National Bank of Canada | Monthly | Overnight Bank Funding Rate Index + 1.50% | October 3, 2023 | 2,990,125 | — | ||||||||||
Cresco Labs | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | May 16, 2023 | 1,049,735 | — | ||||||||||
Cresco Labs* | National Bank of Canada | Monthly | Overnight Bank Funding Rate Index + 1.50% | October 3, 2023 | 3,488,041 | — | ||||||||||
Curaleaf Holdings | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | May 16, 2023 | 1,677,308 | — | ||||||||||
Curaleaf Holdings* | National Bank of Canada | Monthly | Overnight Bank Funding Rate Index + 1.50% | October 3, 2023 | 14,672,294 | — | ||||||||||
Green Thumb Industries | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | May 16, 2023 | 3,983,871 | — | ||||||||||
Green Thumb Industries* | National Bank of Canada | Monthly | Overnight Bank Funding Rate Index + 1.50% | October 3, 2023 | 11,224,323 | — | ||||||||||
Marimed | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | May 16, 2023 | 130,994 | — | ||||||||||
Medicine Man Technologies | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | May 16, 2023 | 92,610 | — | ||||||||||
Trulieve Cannabis | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | May 16, 2023 | 1,855,278 | — | ||||||||||
Trulieve Cannabis* | National Bank of Canada | Monthly | Overnight Bank Funding Rate Index + 1.50% | October 3, 2023 | 6,412,400 | — | ||||||||||
Verano Holdings - Class A | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | May 16, 2023 | 1,593,592 | — | ||||||||||
Verano Holdings - Class A* | National Bank of Canada | Monthly | Overnight Bank Funding Rate Index + 1.50% | October 3, 2023 | 7,765,965 | — | ||||||||||
$ | 57,318,116 | $ | — |
*Total return swap is in a basket swap agreement.
The accompanying notes are an integral part of these financial statements.
ETFMG 2x Daily Alternative Harvest ETF
Schedule of Investments
September 30, 2022
Shares | Value | |||||||
SHORT-TERM INVESTMENTS - 61.2% | ||||||||
Money Market Funds - 61.2% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (a) | 238,799 | $ | 238,799 | |||||
TOTAL SHORT-TERM INVESTMENTS (Cost $238,799) | 238,799 | |||||||
Total Investments (Cost $238,799) - 61.2% | 238,799 | |||||||
Other Assets in Excess of Liabilities - 38.8% | 151,101 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 389,900 |
Percentages are stated as a percent of net assets.
(a) The rate shown is the annualized seven-day yield at period end.
The accompanying notes are an integral part of these financial statements.
ETFMG 2x Daily Alternative Harvest ETF
Schedule of Total Return Swaps
September 30, 2022
Reference Entity |
Fund Pays/Receives Reference Entity |
Counterparty | Payment Frequency |
Financing Rate |
Upfront Premiums Paid/Received |
Notional Amount |
Unrealized Appreciation (Depreciation) |
|||||||||||||
ETFMG Alternative Harvest ETF Swap | Receives | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 1.50% | $ | — | $ | 732,082 | $ | — |
The accompanying notes are an integral part of these financial statements.
ETFMG 2x Daily Inverse Alternative Harvest ETF
Schedule of Investments
September 30, 2022
Shares | Value | |||||||
SHORT-TERM INVESTMENTS - 0.3% | ||||||||
Money Market Funds - 0.3% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (a) | 4,971 | $ | 4,971 | |||||
TOTAL SHORT-TERM INVESTMENTS (Cost $4,971) | 4,971 | |||||||
Total Investments (Cost $4,971) - 0.3% | 4,971 | |||||||
Other Assets in Excess of Liabilities - 99.7% | 1,457,988 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 1,462,959 |
Percentages are stated as a percent of net assets.
(a) The rate shown is the annualized seven-day yield at period end.
The accompanying notes are an integral part of these financial statements.
ETFMG 2x Daily Inverse Alternative Harvest ETF
Schedule of Total Return Swaps
September 30, 2022
Reference Entity |
Fund Pays/Receives Reference Entity |
Counterparty | Payment Frequency |
Financing Rate |
Upfront Premiums Paid/Received |
Notional Amount |
Unrealized Appreciation (Depreciation) |
|||||||||||||
ETFMG Alternative Harvest ETF Swap | Receives | Cowen and Company, LLC | Monthly | Overnight Bank Funding Rate Index + 4.50% | $ | — | $ | (2,574,471 | ) | $ | — |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 2022
ETFMG Alternative Harvest ETF |
ETFMG U.S. Alternative Harvest ETF |
ETFMG 2x Daily Alternative Harvest ETF |
ETFMG 2x Daily Inverse Alternative Harvest ETF |
|||||||||||||
ASSETS | ||||||||||||||||
Investments in unaffiliated securities, at value* | $ | 360,703,695 | $ | 95,783,107 | $ | 238,799 | $ | 4,971 | ||||||||
Investments in affiliated securities, at value* | 112,676,447 | — | — | — | ||||||||||||
Foreign currency* | 154,321 | — | — | — | ||||||||||||
Deposits at Broker for total return swap contracts | — | 13,065,533 | 373,540 | 930,000 | ||||||||||||
Receivables: | ||||||||||||||||
Receivable for fund shares issued | 980,320 | — | — | — | ||||||||||||
Dividends and interest receivable | — | 468,296 | 418 | 431 | ||||||||||||
Securities lending income receivable | 463,034 | 22,125 | — | — | ||||||||||||
Receivable for investments sold | 64,979 | — | — | — | ||||||||||||
Receivable for open swap contracts | — | — | — | 528,679 | ||||||||||||
Total assets | 475,042,796 | 109,339,061 | 612,757 | 1,464,081 | ||||||||||||
LIABILITIES | ||||||||||||||||
Collateral received for securities loaned (Note 7) | 148,794,320 | 434,125 | — | — | ||||||||||||
Payables: | ||||||||||||||||
Payable for investments purchased | 980,320 | — | 9,372 | — | ||||||||||||
Payable for open swap contracts | — | 23,881,749 | 213,095 | — | ||||||||||||
Dividends and interest payable | 354,402 | — | — | — | ||||||||||||
Management fees payable | 184,019 | 56,591 | 390 | 1,122 | ||||||||||||
Total liabilities | 150,313,061 | 24,372,465 | 222,857 | 1,122 | ||||||||||||
Net Assets | $ | 324,729,735 | $ | 84,966,596 | $ | 389,900 | $ | 1,462,959 | ||||||||
NET ASSETS CONSIST OF: | ||||||||||||||||
Paid-in Capital | $ | 2,131,059,415 | $ | 114,039,482 | $ | 743,331 | $ | 735,584 | ||||||||
Total Distributable Earnings (Accumulated Losses) | (1,806,329,680 | ) | (29,072,886 | ) | (353,431 | ) | 727,375 | |||||||||
Net Assets | $ | 324,729,735 | $ | 84,966,596 | $ | 389,900 | $ | 1,462,959 | ||||||||
*Identified Cost: | ||||||||||||||||
Investments in unaffiliated securities | $ | 934,216,117 | $ | 102,737,604 | $ | 238,799 | $ | 4,971 | ||||||||
Investments in affiliated securities | 139,702,715 | — | — | — | ||||||||||||
Foreign currency | 153,182 | — | — | — | ||||||||||||
Shares Outstanding^ | 70,250,000 | 39,280,000 | 890,000 | 60,000 | ||||||||||||
Net Asset Value, Offering and Redemption Price per Share | $ | 4.62 | $ | 2.16 | $ | 0.44 | $ | 24.38 |
^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
For the Year Ended September 30, 2022
(1) | The Fund commenced operations on October 5, 2021. |
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment income | $ | 12,750,826 | $ | 18,791,771 | ||||
Net realized loss on investments and In-Kind redemptions | (422,246,484 | ) | (26,438,605 | ) | ||||
Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | (276,724,561 | ) | 174,690,515 | |||||
Net increase (decrease) in net assets resulting from operations | (686,220,219 | ) | 167,043,681 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | (12,808,889 | ) | (17,257,000 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares | (43,884,655 | ) | 421,833,537 | |||||
Transaction Fees (See Note 1) | 34,194 | 18,289 | ||||||
Net increase (decrease) in net assets from capital share transactions | (43,850,461 | ) | 421,851,826 | |||||
Total increase (decrease) in net assets | (742,879,569 | ) | 571,638,507 | |||||
NET ASSETS | ||||||||
Beginning of Year | 1,067,609,304 | 495,970,797 | ||||||
End of Year | $ | 324,729,735 | $ | 1,067,609,304 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 10,700,000 | $ | 91,358,945 | 57,650,000 | $ | 1,053,114,312 | ||||||||||
Transaction Fees (See Note 1) | — | 34,194 | — | 18,289 | ||||||||||||
Shares Redeemed | (14,600,000 | ) | (135,243,600 | ) | (31,350,000 | ) | (631,269,872 | ) | ||||||||
Net Transactions in Fund Shares | (3,900,000 | ) | $ | (43,850,461 | ) | 26,300,000 | $ | 421,862,729 | ||||||||
Beginning Shares | 74,150,000 | 47,850,000 | ||||||||||||||
Ending Shares | 70,250,000 | 74,150,000 |
The accompanying notes are an integral part of these financial statements.
ETFMG U.S. Alternative Harvest ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Period Ended September 30, 2021(1) |
|||||||
OPERATIONS | ||||||||
Net investment income (loss) | $ | 582,391 | $ | (9,128 | ) | |||
Net realized loss on investments, swap contracts and In-Kind redemptions | (23,603,615 | ) | (1,493,703 | ) | ||||
Net change in unrealized appreciation (depreciation) of | ||||||||
investments and swap contracts | (6,749,745 | ) | (204,752 | ) | ||||
Net decrease in net assets resulting from operations | (29,770,969 | ) | (1,707,583 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets derived from net change in | ||||||||
outstanding shares | 108,640,243 | 7,804,905 | ||||||
Total increase in net assets | 78,869,274 | 6,097,322 | ||||||
NET ASSETS | ||||||||
Beginning of Year/Period | 6,097,322 | — | ||||||
End of Year/Period | $ | 84,966,596 | $ | 6,097,322 |
Summary of share transactions is as follows:
Year Ended | Period Ended | |||||||||||||
September 30, 2022 | September 30, 2021(1) | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Shares Sold | 38,920,000 | $ | 110,968,118 | 790,000 | $ | 7,804,905 | ||||||||
Shares Redeemed | (430,000 | ) | (2,327,875 | ) | — | — | ||||||||
Net Transactions in Fund Shares | 38,490,000 | $ | 108,640,243 | 790,000 | $ | 7,804,905 | ||||||||
Beginning Shares | 790,000 | — | ||||||||||||
Ending Shares | 39,280,000 | 790,000 |
(1) | The Fund commenced operations on May 12, 2021. |
The accompanying notes are an integral part of these financial statements.
ETFMG 2x Daily Alternative Harvest ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Period Ended September 30, 2021(1) |
|||||||
OPERATIONS | ||||||||
Net investment loss | $ | (4,789 | ) | $ | (1,069 | ) | ||
Net realized loss on investments, swap contracts and In-Kind redemptions | (1,631,591 | ) | (396,127 | ) | ||||
Net decrease in net assets resulting from operations | (1,636,380 | ) | (397,196 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets from capital share transactions | 1,464,207 | 959,269 | ||||||
Total increase (decrease) in net assets | (172,173 | ) | 562,073 | |||||
NET ASSETS | ||||||||
Beginning of Year/Period | 562,073 | — | ||||||
End of Year/Period | $ | 389,900 | $ | 562,073 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Period Ended September 30, 2021(1) |
|||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Shares Sold | 840,000 | $ | 1,543,938 | 110,000 | $ | 959,269 | ||||||||
Shares Redeemed | (60,000 | ) | (79,731 | ) | — | — | ||||||||
Net Transactions in Fund Shares | 780,000 | $ | 1,464,207 | 110,000 | $ | 959,269 | ||||||||
Beginning Shares | 110,000 | — | ||||||||||||
Ending Shares | 890,000 | 110,000 |
(1) | The Fund commenced operations on July 6, 2021. |
The accompanying notes are an integral part of these financial statements.
ETFMG 2x Daily Inverse Alternative Harvest ETF
STATEMENT OF CHANGES IN NET ASSETS
Period Ended September 30, 2022 (1) |
||||
OPERATIONS | ||||
Net investment loss | $ | (10,828 | ) | |
Net realized gain on investments, swap contracts and In-Kind redemptions | 999,026 | |||
Net increase in net assets resulting from operations | 988,198 | |||
DISTRIBUTIONS TO SHAREHOLDERS | ||||
Total distributions from distributable earnings | (260,823 | ) | ||
CAPITAL SHARE TRANSACTIONS | ||||
Net increase in net assets from capital share transactions | 735,584 | |||
Total increase in net assets | 1,462,959 | |||
NET ASSETS | ||||
Beginning of Period | — | |||
End of Period | $ | 1,462,959 |
Summary of share transactions is as follows:
Period Ended September 30, 2022 (1) |
|||||||
Shares | Amount | ||||||
Shares Sold | 1,300,000 | $ | 25,819,580 | ||||
Shares Redeemed | (1,240,000 | ) | (25,083,996 | ) | |||
Net Transactions in Fund Shares | 60,000 | $ | 735,584 | ||||
Beginning Shares | — | ||||||
Ending Shares | 60,000 |
(1) | The Fund commenced operations on October 5, 2021. |
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
For a capital share outstanding throughout the year
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, 2018 |
||||||||||||||||
Net Asset Value, Beginning Year | $ | 14.40 | $ | 10.37 | $ | 20.83 | $ | 39.74 | $ | 31.36 | ||||||||||
Income (Loss) from Investment Operations: | ||||||||||||||||||||
Net investment income1 | 0.18 | 0.26 | 0.91 | 1.02 | 0.37 | |||||||||||||||
Net realized and unrealized | ||||||||||||||||||||
gain (loss) on investments | (9.78 | ) | 4.01 | (10.49 | ) | (18.96 | ) | 8.95 | ||||||||||||
Total from investment operations | (9.60 | ) | 4.27 | (9.58 | ) | (17.94 | ) | 9.32 | ||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | (0.18 | ) | (0.24 | ) | (0.88 | ) | (0.97 | ) | (0.74 | ) | ||||||||||
Net realized gains | — | — | — | — | (0.20 | ) | ||||||||||||||
Total distributions | (0.18 | ) | (0.24 | ) | (0.88 | ) | (0.97 | ) | (0.94 | ) | ||||||||||
Net asset value, end year | $ | 4.62 | $ | 14.40 | $ | 10.37 | $ | 20.83 | $ | 39.74 | ||||||||||
Total Return | (67.06 | )% | 40.90 | % | (46.83 | )% | (45.60 | )% | 33.85 | % | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end year (000’s) | $ | 324,730 | $ | 1,067,609 | $ | 495,971 | $ | 800,957 | $ | 679,559 | ||||||||||
Gross Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||
Net Investment Income to | ||||||||||||||||||||
Average Net Assets | 1.95 | % | 1.39 | % | 6.27 | % | 3.26 | % | 1.18 | % | ||||||||||
Portfolio Turnover Rate | 74 | % | 75 | % | 46 | % | 71 | % | 97 | % |
1 | Calculated based on average shares outstanding during the year. |
The accompanying notes are an integral part of these financial statements.
ETFMG U.S. Alternative Harvest ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year/period
Year Ended September 30, 2022 |
Period Ended September 30, 20211 |
|||||||
Net Asset Value, Beginning Year/Period | $ | 7.72 | $ | 10.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment income (loss) 2 | 0.13 | (0.01 | ) | |||||
Net realized and unrealized loss on investments | (5.69 | ) | (2.27 | ) | ||||
Total from investment operations | (5.56 | ) | (2.28 | ) | ||||
Net asset value, end year/period | $ | 2.16 | $ | 7.72 | ||||
Total Return | (71.97 | )% | (22.82 | )%3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of year/period (000’s) | $ | 84,967 | $ | 6,097 | ||||
Gross Expenses to Average Net Assets | 0.75 | % | 0.75 | %4 | ||||
Net Investment Income (Loss) to Average Net Assets | 4.45 | % | (0.38 | )%4 | ||||
Portfolio Turnover Rate | 12 | % | 16 | %3 |
1 | The Fund commenced operations on May 12, 2021. |
2 | Calculated based on average shares outstanding during the year/period. |
3 | Not annualized. |
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG 2x Daily Alternative Harvest ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year/period
Year Ended September 30, 2022 |
Period Ended September 30, 20211 |
|||||||
Net Asset Value, Beginning Year/Period | $ | 5.11 | $ | 10.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment loss 2 | (0.01 | ) | (0.01 | ) | ||||
Net realized and unrealized loss on investments | (4.66 | ) | (4.88 | ) | ||||
Total from investment operations | (4.67 | ) | (4.89 | ) | ||||
Net asset value, end year/period | $ | 0.44 | $ | 5.11 | ||||
Total Return | (91.43 | )% | (48.90 | )%3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of year/period (000’s) | $ | 390 | $ | 562 | ||||
Gross Expenses to Average Net Assets | 0.95 | % | 0.95 | %4 | ||||
Net Investment Loss to Average Net Assets | (0.76 | )% | (0.72 | )%4 | ||||
Portfolio Turnover Rate | 0 | % | 0 | %3 |
1 | The Fund commenced operations on July 6, 2021. |
2 | Calculated based on average shares outstanding during the year/period. |
3 | Not annualized. |
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG 2x Daily Inverse Alternative Harvest ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
Period Ended September 30, 2022 1 |
||||
Net Asset Value, Beginning Period | $ | 10.00 | ||
Income (Loss) from Investment Operations: | ||||
Net investment loss 2 | (0.10 | ) | ||
Net realized and unrealized gain on investments | 18.33 | |||
Total from investment operations | 18.23 | |||
Less Distributions: | ||||
Distributions from net investment income | (3.85 | ) | ||
Net realized gains | — | |||
Total distributions | (3.85 | ) | ||
Net asset value, end period | $ | 24.38 | ||
Total Return | 199.05 | %3 | ||
Ratios/Supplemental Data: | ||||
Net assets at end of period (000’s) | $ | 1,463 | ||
Gross Expenses to Average Net Assets | 0.95 | %4 | ||
Net Investment Loss to Average Net Assets | (0.57 | )%4 | ||
Portfolio Turnover Rate | 0 | %3 |
1 | The Fund commenced operations on October 5, 2021. |
2 | Calculated based on average shares outstanding during the period. |
3 | Not annualized. |
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG TM ETFs
September 30, 2022
NOTE 1 – ORGANIZATION
ETFMG Alternative Harvest ETF (“MJ”), ETFMG U.S. Alternative Harvest ETF (“MJUS”), ETFMG 2x Daily Alternative Harvest ETF (“MJXL”) and ETFMG 2x Daily Inverse Alternative Harvest ETF (“MJIN”) (each a “Fund”, or collectively the “Funds”) are series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Funds’ shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”).
The following table is a summary of the Strategy Commencement Date and Strategy of the Funds:
Fund Ticker | Strategy Commencement Date |
Strategy |
ETFMG Alternative Harvest ETF | 12/3/2015 | Seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Alternative Harvest Index (the “Index”). |
ETFMG U.S. Alternative Harvest ETF | 5/12/2021 | Seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in securities of companies that derive at least 50% of their net revenue from the “Cannabis Business” in the United States, and in derivatives that have economic characteristics similar to such securities. |
ETFMG 2x Daily Alternative Harvest ETF | 7/6/2021 | Seeks daily investment results, before fees and expenses, that correspond to two times (2x) the return of the Index for a single day, not for any other period. |
ETFMG 2x Daily Inverse Alternative Harvest ETF | 10/5/2021 | Seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) (or opposite) of the return of the Index for a single day, not for any other period. |
The Funds may use a combination of swaps on the Index and swaps on an ETF whose investment objective is to track the performance of the same, or a substantially similar index to achieve their investment objective.
The Funds each currently offer one class of shares, which have no front end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of each Fund have equal rights and privileges.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. Market prices for the shares may be different from their net asset value (“NAV”). Each Fund issues and redeems shares on a continuous basis at NAV only in blocks of 50,000 shares for MJ and MJUS and 10,000 shares for MJXL and MJIN, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the shares directly from a Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Funds may invest in certain other investment companies (underlying funds). For more information about each underlying Fund’s operations and policies, please refer to those Fund’s semiannual and annual reports, which are filed with the SEC.
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by ETF Managers Group, LLC (the “Adviser”), using procedures adopted by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2022, the ETFMG Alternative Harvest ETF held one security that was fair valued by the Adviser.
As described above, the Funds utilize various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following table presents a summary of the Funds’ investments in securities and swap contracts at fair value, as of September 30, 2022:
ETFMG Alternative Harvest ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 237,505,184 | $ | — | $ | — | (1) | $ | 237,505,184 | |||||||
Short-Term Investments | 4,252,988 | — | — | 4,252,988 | ||||||||||||
ETFMG Sit Ultra Short ETF** | 28,845,000 | — | — | 28,845,000 | ||||||||||||
ETFMG U.S. Alternative Harvest ETF** | 83,831,447 | — | — | 83,831,447 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 118,945,523 | ||||||||||||
Total Investments in Securities | $ | 345,434,619 | $ | — | $ | — | $ | 473,380,142 |
ETFMG U.S. Alternative Harvest ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 25,008,214 | $ | — | $ | — | $ | 25,008,214 | ||||||||
Short-Term Investments | 4,429,886 | 65,910,882 | — | 70,340,768 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 434,125 | ||||||||||||
Total Investments in Securities | $ | 29,438,100 | $ | 65,910,882 | $ | — | $ | 95,783,107 |
Swap Contracts*** | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Long Total Return Equity Swap Contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Total Swap Contracts | $ | — | $ | — | $ | — | $ | — |
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
ETFMG 2x Daily Alternative Harvest ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Short-Term Investments | $ | 238,799 | $ | — | $ | — | $ | 238,799 | ||||||||
Total Investments in Securities | $ | 238,799 | $ | — | $ | — | $ | 238,799 |
Swap Contracts*** | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Long Total Return Equity Swap Contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Total Swap Contracts | $ | — | $ | — | $ | — | $ | — |
ETFMG 2x Daily Inverse Alternative Harvest ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Short-Term Investments | $ | 4,971 | $ | — | $ | — | $ | 4,971 | ||||||||
Total Investments in Securities | $ | 4,971 | $ | — | $ | — | $ | 4,971 |
Swap Contracts*** | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Long Total Return Equity Swap Contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Total Swap Contracts | $ | — | $ | — | $ | — | $ | — |
(1) | Includes a security valued at $0. |
^ | See Schedule of Investments for classifications by country and industry. |
* | Certain investments that are measured at fair value used the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedules of Investments. |
** | Investment was purchased with collateral. |
*** | Swap contracts are derivative instruments, which are presented at the unrealized appreciation/depreciation on the instrument. |
B. | Federal Income Taxes. The Funds have each elected to be taxed as a “regulated investment company” and intend to distribute substantially all taxable income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of each Fund’s next taxable year.
Each Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Each Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2022 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As of September 30, 2022, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for state purposes, generally a range of three to four years from the date of filing), as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Funds may be subject to income, withholding or other taxes imposed by foreign countries. |
D. | Foreign Currency Translations and Transactions. The Funds may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income are generally declared and paid by each of the Funds on a quarterly basis. Distributions to shareholders from realized gains on securities for each Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
G. | Share Valuation. The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. For Authorized Participants, the offering and redemption price per share for the Funds are equal to the Funds’ respective net asset value per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. |
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Derivatives
The Funds may enter into swap agreements; including interest rate, index, and total return swap agreements. Swap agreements are contracts between parties in which one party agrees to make periodic payments to the other party based on the change in market value or level of a specified rate, index or asset. In return, the other party agrees to make payments to the first party based on the return of a different specified rate, index or asset. Swap agreements will usually be done on a net basis, i.e., where the two parties make net payments with a Fund receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess, if any, of a Fund’s obligations over its entitlements with respect to each swap is accrued on a daily basis and an amount of cash or equivalents having an aggregate value at least equal to the accrued excess is maintained by the Fund.
The total return swap contracts are subject to master netting agreements, which are agreements between a Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund through a single payment, in the event of default or termination. Amounts presented on the schedule of total return swaps are gross settlement amounts.
The following table presents the Funds’ gross derivative assets and liabilities by counterparty and contract type, net of amounts available for offset under a master netting agreement and the related collateral received or pledged by the Funds as of September 30, 2022.
ETFMG U.S. Alternative Harvest ETF
Gross | Gross Amounts not | |||||||||||||||||||||||||
Amounts of | offset in the Statements | |||||||||||||||||||||||||
Recognized | of Assets & Liabilities | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Presented in | ||||||||||||||||||||||||||
the | Gross | |||||||||||||||||||||||||
Statements | Amounts | |||||||||||||||||||||||||
Investment | of Assets & | Available | Net | Financial | Collateral | |||||||||||||||||||||
Counterparty | Type | Liabilities | Offset | Amounts | Instruments | Received | Net Amount | |||||||||||||||||||
Cowen and Company, LLC | Total Return Swap Contracts | $ | 5,085,442 | $ | — | $ | 5,085,442 | $ | — | $ | — | $ | 5,085,442 | |||||||||||||
National Bank of Canada | Total Return Swap Contracts | $ | (18,796,307 | ) | $ | — | $ | (18,796,307 | ) | $ | — | $ | — | $ | (18,796,307 | ) |
ETFMG 2x Daily Alternative Harvest ETF
Gross | Gross Amounts not | |||||||||||||||||||||||||
Amounts of | offset in the Statements | |||||||||||||||||||||||||
Recognized | of Assets & Liabilities | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Presented in | ||||||||||||||||||||||||||
the | Gross | |||||||||||||||||||||||||
Statements | Amounts | |||||||||||||||||||||||||
Investment | of Assets & | Available | Net | Financial | Collateral | |||||||||||||||||||||
Counterparty | Type | Liabilities | Offset | Amounts | Instruments | Received | Net Amount | |||||||||||||||||||
Cowen and Company, LLC | Total Return Swap Contract | $ | (213,095 | ) | $ | — | $ | (213,095 | ) | $ | — | $ | — | $ | (213,095 | ) |
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
ETFMG 2x Daily Inverse Alternative Harvest ETF
Gross | Gross Amounts not | |||||||||||||||||||||||||
Amounts of | offset in the Statements | |||||||||||||||||||||||||
Recognized | of Assets & Liabilities | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Presented in | ||||||||||||||||||||||||||
the | Gross | |||||||||||||||||||||||||
Statements | Amounts | |||||||||||||||||||||||||
Investment | of Assets & | Available | Net | Financial | Collateral | |||||||||||||||||||||
Counterparty | Type | Liabilities | Offset | Amounts | Instruments | Received | Net Amount | |||||||||||||||||||
Cowen and Company, LLC | Total Return Swap Contract | $ | 528,679 | $ | — | $ | 528,679 | $ | — | $ | — | $ | 528,679 |
The average monthly notional amount of the swap contracts during the year ended September 30, 2022 for the Funds were:
ETFMG U.S. Alternative Harvest ETF | Swap Contracts | $ | 11,329,271 | |||||
ETFMG 2x Daily Alternative Harvest ETF | Swap Contract | $ | 1,203,719 | |||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | Swap Contract | $ | (3,272,788 | ) | ||||
The following is a summary of the effect of swap contracts on the Funds’ Statements of Assets and Liabilities as of September 30, 2022:
Assets | Liabilities | Net Unrealized Gain (Loss) | ||||||||||||
ETFMG U.S. Alternative Harvest ETF | Swap Contracts | $ | — | $ | 23,881,749 | $ | — | |||||||
ETFMG 2x Daily Alternative Harvest ETF | Swap Contract | $ | — | $ | 213,095 | $ | — | |||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | Swap Contract | $ | 528,679 | $ | — | $ | — |
The following is a summary of the effect of swap contracts on the Funds’ Statements of Operations for the year ended September 30, 2022:
Realized Gain (Loss) |
Change in Unrealized Appreciation/ Depreciation |
|||||||||
ETFMG U.S. Alternative Harvest ETF | Swap Contracts | $ | (22,727,060 | ) | $ | — | ||||
ETFMG 2x Daily Alternative Harvest ETF | Swap Contract | (1,631,591 | ) | — | ||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | Swap Contract | 999,026 | — |
NOTE 3 – RISK FACTORS
Investing in the Funds may involve certain risks, as discussed in the Funds’ prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a Fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Funds are not actively managed (“Index Funds”). Therefore, those Funds follow the securities included in its respective index during upturns as well as downturns. Because of their indexing strategies, the Index Funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Index Funds’ expenses, the Index Funds’ performance may be below that of their respective index.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that a Fund’s or an index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID- 19),have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect lobal, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility. exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. A Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, leverage, imperfect daily correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions. The use of derivatives is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The use of derivatives may result in larger losses or smaller gains than directly investing in securities. When a Fund uses derivatives, there may be imperfect correlation between the value of the reference assets and the derivative, which may prevent the Fund from achieving its investment objective. Because derivatives often require only a limited initial investment, the use of derivatives may expose a Fund to losses in excess of those amounts initially invested.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Daily Index Correlation/Tracking Risk. There is no guarantee that a Fund will achieve a high degree of correlation to the Index and therefore achieve its daily leveraged investment objective. To achieve a high degree of correlation with the Index, a Fund seeks to rebalance its portfolio daily to keep leverage consistent with its daily leveraged investment objective. In addition, a Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that a Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day. Market disruptions, regulatory restrictions and extreme volatility will also adversely affect a Fund’s ability to adjust exposure to the required levels.
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Funds.
A complete description of the principal risks is included in each Fund’s prospectus under the heading “Principal Investment Risks.”
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
The Advisor serves as the investment advisor to the Funds. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Funds, and the Advisor, the Advisor provides investment advice to the Funds and oversees the day-to-day operations of the Funds, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Funds to operate.
Under the Investment Advisory Agreement, the Advisor has overall responsibility for the general management and administration of the Funds and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Funds to operate. The Funds unitary fees are accrued daily and paid monthly. The Advisor bears the costs of all advisory and non- advisory services required to operate the Funds, in exchange for a single unitary fee at the following annual rates:
ETFMG Alternative Harvest ETF | 0.75 | % | ||
ETFMG U.S. Alternative Harvest ETF | 0.75 | % | ||
ETFMG 2x Daily Alternative Harvest ETF | 0.95 | % | ||
ETFMG 2x Daily Inverse Alternative Harvest ETF | 0.95 | % |
Under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Funds, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an agreement with its affiliate ETFMG Financial, LLC to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds. Level ETF Ventures, LLC (“Level”) serves as the index provider for MJ, MJUS, MJXL and MJIN. Level is not affiliated with the Trust or the Advisor.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Funds. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Funds. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Funds have each adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to each Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. During the year ended September 30, 2022, the Funds did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, during the year ended September 30, 2022:
Purchases | Sales | |||||||
ETFMG Alternative Harvest ETF | $ | 529,422,587 | $ | 588,803,589 | ||||
ETFMG U.S. Alternative Harvest ETF | 31,549,272 | 639,628 |
The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the year ended September 30, 2022:
Purchases In-Kind |
Sales In-Kind |
|||||||
ETFMG Alternative Harvest ETF | $ | 85,541,172 | $ | 125,640,740 | ||||
ETFMG U.S. Alternative Harvest ETF | 890,253 | 651,777 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Funds’ determination of taxable gains and are not distributed to shareholders.
ETFMG U.S. Alternative Harvest ETF had purchases of $65,910,882 and $0 sales of U.S. Government obligations during the year ended September 30, 2022.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 7 — SECURITIES LENDING
The Fund may lend up to 33 1⁄3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short -term obligations either directly on behalf of the Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Adviser; however, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies, in which the Fund may invest cash collateral, can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Adviser. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
As of the year ended September 30, 2022 the value of the securities on loan and payable for collateral due to broker were as follows:
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, a money market fund with an overnight and continuous maturity, and ETFMG Sit Ultra Short ETF as shown on the Schedule of Investments.
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2022 were as follows:
Net | ||||||||||||||||
Gross | Gross | Unrealized | ||||||||||||||
Unrealized | Unrealized | Appreciation | ||||||||||||||
Cost | Appreciation | Depreciation | (Depreciation) | |||||||||||||
ETFMG Alternative Harvest ETF | $ | 1,195,995,311 | $ | 1,117,097 | $ | (723,732,266 | ) | $ | (722,615,169 | ) | ||||||
ETFMG U.S. Alternative Harvest ETF | 103,190,345 | 4,417 | (7,411,655 | ) | (7,407,238 | ) | ||||||||||
ETFMG 2x Daily Alternative Harvest ETF | 238,799 | — | — | — | ||||||||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | 4,971 | — | — | — |
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the components of distributable earnings (loss) on a tax basis were as follows:
Undistributed | Undistributed | Total | Other | Total | ||||||||||||||||
Ordinary | Long-Term | Distributable | Accumulated | Accumulated | ||||||||||||||||
Income | Gain | Earnings | Loss | Gain (Loss) | ||||||||||||||||
ETFMG Alternative Harvest ETF | $ | 1,579,488 | $ | — | $ | 1,579,488 | $ | (1,085,293,999 | ) | $ | (1,806,329,680 | ) | ||||||||
ETFMG U.S. Alternative Harvest ETF | — | — | — | (21,665,648 | ) | (29,072,886 | ) | |||||||||||||
ETFMG 2x Daily Alternative Harvest ETF | — | — | — | (353,431 | ) | (353,431 | ) | |||||||||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | 727,375 | — | 727,375 | — | 727,375 |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2022, the Funds had accumulated capital loss carryovers of:
Capital Loss | Capital Loss | ||||||||||
Carryforward | Carryforward | ||||||||||
ST | LT | Expires | |||||||||
ETFMG Alternative Harvest ETF | $ | (378,499,662 | ) | $ | (706,791,957 | ) | Indefinite | ||||
ETFMG U.S. Alternative Harvest ETF | (778,444 | ) | (43,673 | ) | Indefinite | ||||||
ETFMG 2x Daily Alternative Harvest ETF | (353,431 | ) | — | Indefinite | |||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | — | — | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ending September 30, 2022.
Late Year Ordinary Loss |
Post- October Capital Loss |
|||||||
ETFMG Alternative Harvest ETF | $ | — | $ | — | ||||
ETFMG U.S. Alternative Harvest ETF | (20,843,531 | ) | — | |||||
ETFMG 2x Daily Alternative Harvest ETF | — | — | ||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | — | — |
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2022, the following table shows the reclassifications made:
Total | ||||||||
Distributable | Paid-In | |||||||
Earnings/(Loss) | Capital | |||||||
ETFMG Alternative Harvest ETF | $ | 37,694,645 | $ | (37,694,645 | ) | |||
ETFMG U.S. Alternative Harvest ETF | 985,731 | (985,731 | ) | |||||
ETFMG 2x Daily Alternative Harvest ETF | 1,359,693 | (1,359,693 | ) | |||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | — | — |
The tax character of distributions paid during the year ended September 30, 2022, and the year ended September 30, 2021 were as follows:
Year Ended | Year Ended | |||||||||||||||
September 30, 2022 | September 30, 2021 | |||||||||||||||
From | From | From | From | |||||||||||||
Ordinary | Capital | Ordinary | Capital | |||||||||||||
Income | Gains | Income | Gains | |||||||||||||
ETFMG Alternative Harvest ETF | $ | 12,808,889 | — | $ | 17,257,000 | — | ||||||||||
ETFMG U.S. Alternative Harvest ETF | — | — | — | — | ||||||||||||
ETFMG 2x Daily Alternative Harvest ETF | — | — | — | — | ||||||||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | 260,823 | — | — | — |
NOTE 9 – INVESTMENTS IN AFFILIATES
ETFMG Alternative Harvest ETF
ETFMG Alternative Harvest ETF owned the following companies during the year ended September 30, 2022. ETFMG Sit Ultra Short ETF and ETFMG U.S. Alternative Harvest ETF are deemed to be affiliates of the Fund as defined by the 1940 Act as of the year ended September 30, 2022. Transactions during the year in these securities were as follows:
Change in | ||||||||||||||||||||||||||||||||
Value at | Unrealized | Value at | ||||||||||||||||||||||||||||||
September 30, | Realized Gain | Appreciation | Dividend | September 30, | Ending | |||||||||||||||||||||||||||
Security Name | 2021 | Purchases | Sales | (Loss)(1) | (Depreciation) | Income | 2022 | Shares | ||||||||||||||||||||||||
22nd Century Group, Inc. | $ | 38,141,530 | $ | 3,371,991 | $ | (25,246,294 | ) | $ | (15,752,872 | ) | $ | 964,780 | $ | — | $ | 1,479,135 | $ | 1,595,099 | ||||||||||||||
Aurora Cannabis, Inc. | 77,960,284 | 13,895,308 | (17,045,361 | ) | (16,521,175 | ) | (45,573,396 | ) | — | 12,715,660 | 10,422,672 | |||||||||||||||||||||
Clever Leaves Holdings, Inc. | 17,915,605 | 583,293 | (6,750,116 | ) | (21,402,040 | ) | 9,653,258 | — | — | — | ||||||||||||||||||||||
Corbus Pharmaceuticals Holdings, Inc. | 14,383,541 | 1,436,175 | (3,696,098 | ) | (17,455,042 | ) | 6,108,627 | — | 777,203 | 4,710,319 | ||||||||||||||||||||||
ETFMG Sit Ultra Short ETF * | 85,827,375 | — | (54,812,979 | ) | (1,156,822 | ) | (1,012,574 | ) | — | 28,845,000 | 600,000 | |||||||||||||||||||||
ETFMG U.S. Alternative Harvest ETF * | — | 110,022,468 | (169,972 | ) | 1,422 | (26,022,471 | ) | — | 83,831,447 | 38,873,845 | ||||||||||||||||||||||
Organigram Holdings, Inc. | 60,578,493 | 8,383,296 | (31,922,653 | ) | (13,755,232 | ) | (11,550,651 | ) | — | 11,733,253 | 13,461,740 | |||||||||||||||||||||
Village Farms International, Inc. | 36,150,781 | 3,088,376 | (15,751,353 | ) | (20,103,758 | ) | (1,548,381 | ) | — | 1,835,665 | 961,081 | |||||||||||||||||||||
Zynerba Pharmaceuticals, Inc. | 18,879,935 | 2,330,079 | (5,560,165 | ) | (9,716,318 | ) | (4,279,965 | ) | — | 1,653,566 | 2,258,970 | |||||||||||||||||||||
Total | $ | 349,837,544 | $ | 143,110,986 | $ | (160,954,991 | ) | $ | (115,861,837 | ) | $ | (73,260,773 | ) | $ | — | $ | 142,870,929 | $ | 72,883,726 |
*Affiliate as of September 30, 2022.
1 | Realized Losses include transactions in affiliated investments and affiliated in-kind redemptions. |
NOTE 10 – LEGAL MATTERS
The Trust, the Adviser, and certain officers and affiliated persons of the Adviser (together with the Adviser, the “Adviser Defendants”) were named as defendants in an action filed December 21, 2021, in the Superior Court of New Jersey, Union County, captioned PureShares, LLC, d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. UNN-C-152-21 (the “NJ Action”). The NJ Action asserted breach of contract and other tort claims and sought damages in unspecified amounts and injunctive relief. On May 25, 2022, the court in the NJ Action dismissed with prejudice all claims asserted against the Trust, as well as all contract claims and all except one tort claim asserted against the Adviser Defendants.
ETFMG TM ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As of September 30, 2022, there were no adjustments made to the accompanying financial statements based on the above legal matters.
NOTE 11 – SUBSEQUENT EVENTS
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. The Board of Trustees of the Trust approved a Plan of Liquidation for the ETFMG 2x Daily Inverse Alternative Harvest ETF effective November 23, 2022. The Plan of Liquidation authorizes the termination, liquidation and dissolution of the Fund.
Other than as disclosed, there were no other subsequent events requiring recognition or disclosure through the date the financial statements were issued.
ETFMG TM ETFs
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of ETFMG Alternative Harvest ETF, ETFMG U.S. Alternative Harvest ETF, ETFMG
2x Daily Alternative Harvest ETF and ETFMG 2x Daily Inverse Alternative Harvest ETF:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments of ETFMG Alternative Harvest ETF and the schedules of investments and total return swaps of ETFMG U.S. Alternative Harvest ETF, ETFMG 2x Daily Alternative Harvest ETF and ETFMG 2x Daily Inverse Alternative Harvest ETF (collectively the “Funds”) (certain of the Funds comprising ETF Managers Trust), as of September 30, 2022, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended of ETFMG Alternative Harvest ETF, ETFMG U.S. Alternative Harvest ETF and ETFMG 2x Daily Alternative Harvest ETF and the statement of changes in net assets for the period ended of ETFMG 2x Daily Inverse Alternative Harvest ETF, the financial highlights for each of the periods indicated therein and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of September 30, 2022, and the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended of ETFMG Alternative Harvest ETF, ETFMG U.S. Alternative Harvest ETF and ETFMG 2x Daily Alternative Harvest ETF and the statement of changes in net assets for the period ended of ETFMG 2x Daily Inverse Alternative Harvest ETF, and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor for one or more series of the Trust since 2013.
New York, New York
November 29, 2022
ETFMG TM ETFs
September 30, 2022 (Unaudited)
As a shareholder of the Funds you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 invested for the period of time as indicated in the table below.
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
Fund Name |
Beginning Account Value April 1, 2022 |
Ending Account Value September 30, |
Expenses Paid During the Period^ |
Annualized Expense 2022 |
||||||||||||
ETFMG Alternative Harvest ETF | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 455.30 | $ | 2.74 | 0.75 | % | ||||||||
Hypothetical (5% annual) | 1,000.00 | 1,021.31 | 3.80 | 0.75 | % | |||||||||||
ETFMG U.S. Alternative Harvest ETF | ||||||||||||||||
Actual | 1,000.00 | 438.60 | 2.70 | 0.75 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,021.31 | 3.80 | 0.75 | % | |||||||||||
ETFMG 2x Daily Alternative Harvest ETF | ||||||||||||||||
Actual | 1,000.00 | 182.60 | 2.82 | 0.95 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,020.31 | 4.81 | 0.95 | % | |||||||||||
ETFMG 2x Daily Inverse Alternative Harvest ETF | ||||||||||||||||
Actual | 1,000.00 | 2,483.80 | 8.30 | 0.95 | % | |||||||||||
Hypothetical (5% annual) | 1,000.00 | 1,020.31 | 4.81 | 0.95 | % |
^ | The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/365 (to reflect the one-half year period). |
ETFMG TM ETFs
September 30, 2022 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2022, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Fund Name | Qualified Dividend Income |
ETFMG Alternative Harvest ETF | 66.57% |
ETFMG U.S. Alternative Harvest ETF | 0.00% |
ETFMG 2x Daily Alternative Harvest ETF | 0.00% |
ETFMG 2x Daily Inverse Alternative Harvest ETF | 0.00% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2022 was as follows:
Fund Name | Dividends Received Deduction |
ETFMG Alternative Harvest ETF | 44.39% |
ETFMG U.S. Alternative Harvest ETF | 0.00% |
ETFMG 2x Daily Alternative Harvest ETF | 0.00% |
ETFMG 2x Daily Inverse Alternative Harvest ETF | 0.00% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for each Fund were as follows:
Fund Name | Short-Term Capital Gain |
ETFMG Alternative Harvest ETF | 0.00% |
ETFMG U.S. Alternative Harvest ETF | 0.00% |
ETFMG 2x Daily Alternative Harvest ETF | 0.00% |
ETFMG 2x Daily Inverse Alternative Harvest ETF | 0.00% |
ETFMG TM ETFs
SUPPLEMENTARY INFORMATION
September 30, 2022 (Unaudited)(Continued)
During the year ended September 30, 2022, the Funds did not declare any long-term realized gains distributions.
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the Securities and Exchange Commission (“SEC”) on Part F of Form N-PORT. The Funds’ Part F of Form N-PORT is available on the website of the SEC at www.sec.gov and the Funds’ website at www.etfmgfunds.com. Each Fund’s portfolio holdings are posted on their website at www.etfmgfunds.com daily.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at (877) 756-7873, by accessing the SEC’s website at www.sec.gov, or by accessing the Funds’ website at www.etfmgfunds.com.
Information regarding how the Funds voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at (877) 756-7873 or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
ETFMG TM ETFs
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
ETFMG Alternative Harvest ETF
Board of Trustees (Continued)
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
Terry Loebs (1963) | Trustee (since 2014); Lead Independent Trustee (since 2020) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 17 | None |
Eric Wiegel (1960) | Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017- 2018). | 17 | None |
ETFMG TM ETFs
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S. Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2022
BlueStar Israel Technology ETF
Ticker: ITEQ
The fund is a series of ETF Managers Trust.
BlueStar Israel Technology ETF
TABLE OF CONTENTS
September 30, 2022
BlueStar Israel Technology ETF
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the BlueStar Israel Technology Exchange Traded Fund (“ITEQ” or the “Fund”). The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the BlueStar Israel Global Technology Index (the “Index”).
Market Overview
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and, in many cases, unprecedented volatility and severe losses due to the global pandemic caused by COVID-19. Some sectors of the economy and individual issuers have experienced particularly large losses because of these disruptions. In response to these disruptions, the U.S. government and the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, contributing to inflationary pressure and expectations for inflation. Further, Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict have increased volatility and uncertainty in the financial markets and adversely affect regional and global economies. The full extent and duration of these conditions and the totality of repercussions are impossible to predict but could continue to result in significant market disruptions and may continue to negatively affect global supply chains, inflation and global growth. These and related events have impacted the ETFs’ performance, among other factors, and the value of an investment in the ETFs. We encourage you to talk with your financial advisor and visit etfmg.com for further insight about investing in today’s markets.
Over the fiscal-year ending September 30, 2022 the total return for the Fund was -33.52% while the total return for the Index was -33.65%. The difference was primarily attributable to Fund expenses that are not borne by the Index. The best performers in the Fund on the basis of contribution to its return were Elbit Systems Ltd, Tower Semiconductor Ltd, Amdocs Ltd, Ormat Technologies Inc and Sentinelone Inc -Class A, while the worst performers were Kornit Digital Ltd, Wix.Com Ltd, Fiverr International Ltd, Nice Ltd - Spon Adr, Varonis Systems Inc.
During the reporting period, the Fund saw an average approximate allocation of 71.49% to the Information Technology sector, 8.2% to Health Care and 5.97% to Industrials. The portfolio holdings of the Fund were exposed predominately to Israel at 52.86% and the United States at 44.78%, followed by the United Kingdom 0.41%.
We continue to believe that Israeli companies play an essential role in the global high technology value chain. Most technology users, from online shoppers to Fortune 500 companies, use Israeli technology applications and solutions every day without ever being aware of it. From cybersecurity and defense to clean energy and agriculture, Israeli innovations power some of the biggest names in the tech industry today.
Even in industries where Israeli companies do not have dominant individual market share, the collective footprint of Israeli companies remains significant in many key technology subsectors, and Israel-based Research & Development and non-public companies continue to be significant contributors to that same sub-industry’s ecosystem.
There is much ahead for Israeli Technology companies and we are thankful you have joined us. You can find further details about ITEQ by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS. (1-844-383-6477).
Sincerely, | |
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|
Samuel Masucci III | |
Chairman of the Board |
BlueStar Israel Technology ETF
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
5 Year Return |
Since Inception (11/2/2015) |
Value of $10,000 (9/30/2022) |
||||||||||||
BlueStar Israel Technology ETF (NAV) | -33.52 | % | 7.30 | % | 8.80 | % | $ | 17,918 | ||||||||
BlueStar Israel Technology ETF (Market) | -33.65 | % | 7.10 | % | 8.73 | % | $ | 17,837 | ||||||||
S&P 500 Index | -15.47 | % | 9.24 | % | 10.07 | % | $ | 19,409 | ||||||||
BlueStar Israel Global Technology IndexTM | -33.65 | % | 7.98 | % | 9.53 | % | $ | 18,759 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 2, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
BlueStar Israel Technology ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security | % of Total Investments |
||
1 | Nice, Ltd. | 6.31% | |
2 | Amdocs, Ltd. | 6.10% | |
3 | Check Point Software Technologies, Ltd. | 5.98% | |
4 | SolarEdge Technologies, Inc. | 5.66% | |
5 | CyberArk Software, Ltd. | 4.75% | |
6 | SentinelOne, Inc. - Class A | 3.40% | |
7 | Tower Semiconductor, Ltd. | 3.39% | |
8 | Elbit Systems, Ltd. | 3.34% | |
9 | Wix.com, Ltd. | 2.68% | |
10 | Novocure, Ltd. | 2.64% |
Top Ten Holdings = 44.25% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
BlueStar Israel Technology ETF
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
ITEQ
The BlueStar Israel Technology ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the BlueStar Israel Global Technology Index (the “Index”).
The Fund invests in Israeli companies. Foreign investing involves special risks such as currency fluctuations and political uncertainty. Funds that invest in smaller companies may experience greater volatility. Funds that emphasize investments in technology generally will experience greater price volatility. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund.
ETF shares are not individually redeemable, and owners of the shares may acquire those shares from the Fund and tender those shares for redemption to the Fund in Creation Units only, in blocks of 50,000 shares.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
Distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG Financial LLC is not affiliated with BlueStar Indexes.
BlueStar Israel Technology ETF
As of September 30, 2022 (Unaudited)
BlueStar Israel Technology ETF |
||||
As a percent of Net Assets: | ||||
Cayman Islands | 0.6 | % | ||
Gibraltar | 0.4 | |||
Guernsey | 7.5 | |||
Israel | 64.3 | |||
Jersey | 3.2 | |||
United States | 22.3 | |||
Short-Term and other Net Assets (Liabilities) | 1.7 | |||
100.0 | % |
BlueStar Israel Technology ETF
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 98.3% | ||||||||
Cayman Islands - 0.6% | ||||||||
Software - 0.6% (d) | ||||||||
Sapiens International Corp. NV (b) | 34,160 | $ | 655,189 | |||||
Gibraltar - 0.4% | ||||||||
Hotels, Restaurants & Leisure - 0.4% | ||||||||
888 Holdings PLC (a) | 462,376 | 483,223 | ||||||
Guernsey - 7.5% | ||||||||
IT Services - 7.5% | ||||||||
Amdocs, Ltd. | 109,117 | 8,669,346 | ||||||
Israel - 64.3% | ||||||||
Aerospace & Defense - 4.6% | ||||||||
Elbit Systems, Ltd. (b) | 24,985 | 4,751,398 | ||||||
RADA Electronic Industries, Ltd. (a) | 66,115 | 636,687 | ||||||
Total Aerospace & Defense | 5,388,085 | |||||||
Auto Components - 0.2% | ||||||||
REE Automotive, Ltd. (a) | 287,959 | 196,215 | ||||||
Biotechnology - 0.2% | ||||||||
Kamada, Ltd. (a) | 47,003 | 208,507 | ||||||
Communications Equipment - 3.0% | ||||||||
AudioCodes, Ltd. | 35,722 | 779,097 | ||||||
Ceragon Networks, Ltd. (a) | 209,728 | 385,900 | ||||||
Gilat Satellite Networks, Ltd. (a) | 85,563 | 456,051 | ||||||
Ituran Location and Control, Ltd. | 18,009 | 420,330 | ||||||
Radware, Ltd. (a) | 47,610 | 1,037,421 | ||||||
Silicom, Ltd. (a) | 12,054 | 425,988 | ||||||
Total Communications Equipment | 3,504,787 | |||||||
Diversified Financial Services - 1.7% | ||||||||
Plus500, Ltd. | 110,540 | 2,032,775 | ||||||
Electronic Equipment, Instruments & Components - 1.0% | ||||||||
Arbe Robotics, Ltd. (a)(b) | 35,746 | 214,476 | ||||||
Innoviz Technologies, Ltd. (a)(b) | 175,681 | 915,298 | ||||||
Total Electronic Equipment, Instruments & Components | 1,129,774 | |||||||
Health Care Equipment & Supplies - 4.0% | ||||||||
Alpha Tau Medical, Ltd. (a)(b) | 96,060 | 560,990 | ||||||
Inmode, Ltd. (a)(b) | 96,056 | 2,796,190 | ||||||
Nano-X Imaging, Ltd. - ADR (a)(b) | 77,229 | 885,817 | ||||||
Sisram Medical, Ltd. (e) | 377,671 | 293,009 | ||||||
Total Health Care Equipment & Supplies | 4,536,006 | |||||||
Household Durables - 0.6% | ||||||||
Maytronics, Ltd. | 55,799 | 692,046 |
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Independent Power and Renewable Electricity Producers - 2.6% | ||||||||
Energix-Renewable Energies, Ltd. | 293,981 | $ | 1,152,430 | |||||
Enlight Renewable Energy, Ltd. (a) | 665,079 | 1,412,308 | ||||||
OY Nofar Energy, Ltd. (a) | 16,812 | 501,119 | ||||||
Total Independent Power and Renewable Electricity Producers | 3,065,857 | |||||||
Interactive Media & Services - 0.4% | ||||||||
Taboola.com, Ltd. (a) | 252,495 | 457,016 | ||||||
Internet & Direct Marketing Retail - 1.1% | ||||||||
Fiverr International, Ltd. (a)(b) | 42,410 | 1,297,321 | ||||||
IT Services - 5.0% | ||||||||
Formula Systems 1985, Ltd. | 7,498 | 610,352 | ||||||
Matrix IT, Ltd. | 36,342 | 824,414 | ||||||
One Software Technologies, Ltd. | 40,737 | 616,838 | ||||||
Wix.com, Ltd. (a) | 48,695 | 3,809,410 | ||||||
Total IT Services | 5,861,014 | |||||||
Life Sciences Tools & Services - 0.1% | ||||||||
Compugen, Ltd. (a) | 200,430 | 131,683 | ||||||
Machinery - 1.4% | ||||||||
Kornit Digital, Ltd. (a) | 59,536 | 1,584,253 | ||||||
Media - 1.2% | ||||||||
Perion Network, Ltd. (a) | 63,635 | 1,227,520 | ||||||
Tremor International, Ltd. (a) | 62,771 | 217,969 | ||||||
Total Media | 1,445,489 | |||||||
Semiconductors & Semiconductor Equipment - 7.1% | ||||||||
Camtek, Ltd. (a)(b) | 39,073 | 905,321 | ||||||
Nova, Ltd. (a)(b) | 30,350 | 2,588,855 | ||||||
Tower Semiconductor, Ltd. (a) | 109,445 | 4,809,013 | ||||||
Total Semiconductors & Semiconductor Equipment | 8,303,189 | |||||||
Software - 28.5% (d) | ||||||||
Cellebrite DI, Ltd. (a)(b) | 80,512 | 315,607 | ||||||
Check Point Software Technologies, Ltd. (a) | 75,802 | 8,491,340 | ||||||
Cognyte Software, Ltd. (a) | 90,728 | 366,541 | ||||||
CyberArk Software, Ltd. (a) | 45,019 | 6,750,149 | ||||||
Hilan, Ltd. | 14,353 | 768,713 | ||||||
ironSource, Ltd. (a) | 681,703 | 2,345,058 | ||||||
Jfrog, Ltd. (a)(b) | 79,333 | 1,754,053 | ||||||
Magic Software Enterprises, Ltd. | 24,933 | 386,623 | ||||||
Monday.com, Ltd. (a) | 18,314 | 2,075,709 | ||||||
Nice, Ltd. - ADR (a)(b) | 47,587 | 8,957,778 | ||||||
Riskified, Ltd. (a) | 96,011 | 378,283 | ||||||
SimilarWeb, Ltd. (a) | 50,300 | 294,758 | ||||||
WalkMe, Ltd. (a)(b) | 45,995 | 390,958 | ||||||
Total Software | 33,275,570 | |||||||
Technology Hardware, Storage & Peripherals - 1.6% | ||||||||
Nano Dimension, Ltd. - ADR (a) | 330,096 | 788,929 | ||||||
Stratasys, Ltd. (a) | 70,543 | 1,016,525 | ||||||
Total Technology Hardware, Storage & Peripherals | 1,805,454 | |||||||
Total Israel | 74,915,041 |
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Jersey - 3.2% | ||||||||
Health Care Equipment & Supplies - 3.2% | ||||||||
Novocure, Ltd. (a)(b) | 49,367 | $ | 3,750,904 | |||||
United States - 22.3% | ||||||||
Biotechnology - 0.3% | ||||||||
Lineage Cell Therapeutics, Inc. (a) | 329,826 | 372,703 | ||||||
Pluri, Inc. (a) | 1 | 1 | ||||||
Total Biotechnology | 372,704 | |||||||
Electronic Equipment, Instruments & Components - 0.5% | ||||||||
Vishay Precision Group, Inc. (a) | 19,188 | 567,773 | ||||||
Entertainment - 0.7% | ||||||||
Playtika Holding Corp. (a)(b) | 87,844 | 824,855 | ||||||
Independent Power & Renewable Energy - 2.8% | ||||||||
Ormat Technologies, Inc. | 36,854 | 3,188,071 | ||||||
Insurance - 1.0% | ||||||||
Lemonade, Inc. (a)(b) | 54,999 | 1,164,879 | ||||||
IT Services - 1.1% | ||||||||
Payoneer Global, Inc. (a) | 214,617 | 1,298,433 | ||||||
Pharmaceuticals - 0.5% | ||||||||
Oramed Pharmaceuticals, Inc. (a)(b) | 94,493 | 612,315 | ||||||
Semiconductors & Semiconductor Equipment - 7.5% | ||||||||
CEVA, Inc. (a)(b) | 26,165 | 686,308 | ||||||
SolarEdge Technologies, Inc. (a)(b) | 34,755 | 8,044,393 | ||||||
Total Semiconductors & Semiconductor Equipment | 8,730,701 | |||||||
Software - 7.9% (d) | ||||||||
LivePerson, Inc. (a) | 58,065 | 546,972 | ||||||
SentinelOne, Inc. - Class A (a) | 189,179 | 4,835,415 | ||||||
Varonis Systems, Inc. (a) | 89,002 | 2,360,333 | ||||||
Verint Systems, Inc. (a) | 44,604 | 1,497,802 | ||||||
Total Software | 9,240,522 | |||||||
Total United States | 26,000,253 | |||||||
TOTAL COMMON STOCKS (Cost $152,149,625) | 114,473,956 |
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
INVESTMENTS PURCHASED WITH PROCEEDS FROM | ||||||||
SECURITIES LENDING COLLATERAL - 22.7% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 3.18% (c) | 26,398,104 | $ | 26,398,104 | |||||
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $26,398,104) | 26,398,104 | |||||||
SHORT-TERM INVESTMENTS - 1.0% | ||||||||
Money Market Funds - 1.0% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (c) | 1,188,096 | 1,188,096 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $1,188,096) | 1,188,096 | |||||||
Total Investments (Cost $179,735,825) - 122.0% | 142,060,156 | |||||||
Liabilities in Excess of Other Assets - (22.0)% | (25,617,296 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 116,442,860 |
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
PLC | Public Limited Company |
(a) | Non-income producing security. |
(b) | All or a portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the annualized seven-day yield at period end. |
(d) | As of September 30, 2022 the Fund had a significant portion of its assets in the Software Industry. |
(e) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration to qualified institutional investors. At September 30, 2022, the market value of these securities total $293,009, which represents 0.3% of total net assets. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2022
BlueStar Israel Technology ETF |
||||
ASSETS | ||||
Investments in securities, at value* | $ | 142,060,156 | ||
Foreign currency* | 5,586 | |||
Receivables: | ||||
Receivable for investments sold | 673,842 | |||
Dividends and interest receivable | 105,847 | |||
Securities lending income receivable | 72,358 | |||
Total Assets | $ | 142,917,789 | ||
LIABILITIES | ||||
Collateral received for securities loaned (Note 7) | 26,398,104 | |||
Payables: | ||||
Unitary fees payable | 76,825 | |||
Total Liabilities | 26,474,929 | |||
Net Assets | $ | 116,442,860 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in capital | $ | 175,303,879 | ||
Total distributable earnings (accumulated losses) | (58,861,019 | ) | ||
Net Assets | $ | 116,442,860 | ||
*Identified Cost: | ||||
Investments in securities | $ | 179,735,825 | ||
Foreign currency | 5,967 | |||
Shares Outstanding^ | 2,650,000 | |||
Net Asset Value, Offering and Redemption Price per Share | $ | 43.94 |
^ No par value, unlimited number of shares authorized
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
For the Year Ended September 30, 2022
BlueStar Israel Technology ETF |
||||
INVESTMENT INCOME | ||||
Income: | ||||
Dividends from securities (net of foreign withholdings tax and issuance fees of $105,608) | 499,782 | |||
Interest | 4,840 | |||
Securities lending income | 449,799 | |||
Total Investment Income | 954,421 | |||
Expenses: | ||||
Unitary Fees | 1,095,603 | |||
Miscellaneous Expense | 3,240 | |||
Total Expenses | 1,098,843 | |||
Net Investment Loss | (144,422 | ) | ||
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
Net Realized Gain (Loss) on: | ||||
Unaffiliated investments | (13,052,651 | ) | ||
In-Kind redemptions | 21,879,069 | |||
Foreign currency and foreign currency translation | (23,005 | ) | ||
Net Realized Gain on Investments and In-Kind Redemptions | 8,803,413 | |||
Net Change in Unrealized Appreciation/Depreciation of: | ||||
Unaffiliated investments | (69,063,055 | ) | ||
Foreign currency and foreign currency translation | (400 | ) | ||
Net Change in Unrealized Appreciation/Depreciation of Investments | (69,063,455 | ) | ||
Net Realized and Unrealized Loss on Investments | (60,260,042 | ) | ||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (60,404,464 | ) |
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment loss | $ | (144,422 | ) | $ | (40,497 | ) | ||
Net realized gain on investments and in-kind redemptions | 8,803,413 | 26,468,417 | ||||||
Net change in unrealized appreciation/depreciation of investments | (69,063,455 | ) | (4,592,205 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (60,404,464 | ) | 21,835,715 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | — | (1,110,500 | ) | |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares | (14,825,280 | ) | 43,145,340 | |||||
Net increase (decrease) in net assets | (75,229,744 | ) | 63,870,555 | |||||
NET ASSETS | ||||||||
Beginning of Year | 191,672,604 | 127,802,049 | ||||||
End of Year | $ | 116,442,860 | $ | 191,672,604 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||
Shares Sold | 700,000 | $ | 42,311,335 | 1,500,000 | $ | 103,500,515 | |||||||||||
Shares Redeemed | (950,000 | ) | (57,136,615 | ) | (900,000 | ) | (60,355,175 | ) | |||||||||
Net Transactions in Fund Shares | (250,000 | ) | $ | (14,825,280 | ) | 600,000 | $ | 43,145,340 | |||||||||
Beginning Shares | 2,900,000 | 2,300,000 | |||||||||||||||
Ending Shares | 2,650,000 | 2,900,000 |
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
For a capital share outstanding throughout the year
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, 2018 |
||||||||||||||||
Net Asset Value, | ||||||||||||||||||||
Beginning of Year | $ | 66.09 | $ | 55.57 | $ | 39.92 | $ | 36.03 | $ | 31.38 | ||||||||||
Income (Loss) from | ||||||||||||||||||||
Investment Operations: | ||||||||||||||||||||
Net investment income (loss) 1 | (0.05 | ) | (0.01 | ) | (0.06 | ) | (0.04 | ) | 0.04 | |||||||||||
Net realized and unrealized | ||||||||||||||||||||
gain (loss) on investments | (22.10 | ) | 10.97 | 15.71 | 4.03 | 4.78 | ||||||||||||||
Total from investment operations | (22.15 | ) | 10.96 | 15.65 | 3.99 | 4.82 | ||||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | — | (0.44 | ) | — | (0.09 | ) | (0.17 | ) | ||||||||||||
Return of Capital | — | — | — | (0.01 | ) | — | ||||||||||||||
Total Distributions | — | (0.44 | ) | — | (0.10 | ) | (0.17 | ) | ||||||||||||
Net Asset Value, end of year | $ | 43.94 | $ | 66.09 | $ | 55.57 | $ | 39.92 | $ | 36.03 | ||||||||||
Total Return | (33.52 | )% | 19.76 | % | 39.20 | % | 11.17 | % | 15.41 | % | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end of year (000’s) | $ | 116,443 | $ | 191,673 | $ | 127,802 | $ | 73,847 | $ | 61,243 | ||||||||||
Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||
Net Investment Income (Loss) to Average Net Assets | (0.10 | )% | (0.02 | )% | (0.12 | )% | (0.12 | )% | 0.12 | % | ||||||||||
Portfolio Turnover Rate | 25 | % | 21 | % | 19 | % | 24 | % | 11 | % |
1 | Calculated based on average shares outstanding during the year. |
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
September 30, 2022
NOTE 1 – ORGANIZATION
BlueStar Israel Technology ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the BlueStar Israel Global Technology IndexTM (BIGITechTM” or the “Index”). The Fund commenced operations on November 2, 2015.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Fund may invest in certain other investment companies (underlying funds) . For more information about the underlying fund’s operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the SEC.
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by ETF Managers Group, LLC (the “Adviser”), using procedures adopted by the Board of Trustees (the “Board”) . When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would be calculated without regard to such considerations. As of September 30, 2022, the Fund did not hold any securities fair valued by the Adviser.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The following is a summary of the inputs used to value the Fund’s net assets as of September 30, 2022:
BlueStar Israel Technology ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 114,473,956 | $ | — | $ | — | $ | 114,473,956 | ||||||||
Short-Term Investments | 1,188,096 | — | — | 1,188,096 | ||||||||||||
Investments Purchased with Securities | ||||||||||||||||
Lending Collateral* | — | — | — | 26,398,104 | ||||||||||||
Total Investments in Securities | $ | 115,662,052 | $ | — | $ | — | $ | 142,060,156 |
^ See Schedule of Investments for classifications by country and industry.
* Certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments.
B. | Federal Income Taxes. The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Fund’s 2022 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
As of September 30, 2022, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, generally a range of three to four years from the date of filing) as applicable to the Fund, and has determined that no provision for income tax is required in the Fund’s financial statements.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries. |
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
D. | Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: |
(i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences.
E. | Distributions to Shareholders. Distributions to shareholders from net investment income, if any are generally declared and paid by the Fund on a quarterly basis. Net realized gains on securities of the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
G. | Share Valuation. The NAV per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in the BlueStar Israel Technology ETF may involve certain risks, as discussed in the Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Fund is not actively managed. Therefore, the Fund follows the securities included in its respective index during upturns as well as downturns. Because of its indexing strategy, the Fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Fund’s expenses, the Fund’s performance may be below that of its index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that the Fund’s or its underlying index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the Fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Fund and its investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under these circumstances, the Fund may have difficulty achieving its investment objective which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Fund’s third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Fund to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on the Fund’s performance, resulting in losses to the Fund.
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Fund.
A complete description of the principal risks is included in the Fund’s prospectus under the heading “Principal Investment Risks.”
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
The Adviser serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Adviser, the Adviser provides investment advice to the Fund and oversees the day-today operations of the Fund, subject to the direction and control of the Board and the officers of the Trust.
Under the Investment Advisory Agreement with the Fund, the Adviser has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Adviser bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Adviser at an annual rate of 0.75% of the Fund’s average daily net assets. Under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Fund, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Adviser has entered into an agreement with its affiliate, ETFMG Financial, LLC, to serve as distributor to the Fund (the “Distributor”). The Distributor provides marketing support for the Fund, including distributing marketing materials related to the Fund.
The Adviser has entered into an Agreement with BlueStar Global Investors LLC (“BlueStar”), under which BlueStar agrees to sublicense the use of the Underlying Index from BlueStar Indexes for use by the Adviser and the Fund. BlueStar also provides marketing support for the Fund, including distributing marketing materials related to the Fund. BlueStar does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Fund. Additionally, BlueStar is not involved in the maintenance of the Underlying Index and does not otherwise act in the capacity of an index provider.
U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (the “Administrator”), provides fund accounting, fund administration, and transfer agency services to the Fund. The Adviser compensates the Administrator for these services under an administration agreement between the two parties.
The Adviser pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Adviser for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b- 1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the year ended September 30, 2022, the Fund did not incur any 12b-1 expenses.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the year ended September 30, 2022:
Purchases | Sales | |||||||
BlueStar Israel Technology ETF | $ | 36,374,124 | $ | 39,957,634 |
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the year ended September 30, 2022:
Purchases In- Kind |
Sales In- Kind |
|||||||
BlueStar Israel Technology ETF | $ | 40,140,600 | $ | 52,748,591 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the determination of the Fund’s taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations for the year ended September 30, 2022.
NOTE 7 — SECURITIES LENDING
The Fund may lend up to 33 1/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earns interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations, either directly on behalf of the Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Adviser; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which the Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Adviser. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As of September 30, 2022, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
Fund | Values of Securities on Loan |
Fund Collateral Received* |
||||||
BlueStar Israel Technology ETF | $ | 25,471,147 | $ | 26,398,104 |
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, an investment with an overnight and continuous maturity, as shown on the Schedule of Investments.
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2022, the Fund’s most recent fiscal year end, were as follows:
Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
BlueStar Israel Technology ETF | $ | 186,363,170 | $ | 10,069,196 | $ | (54,372,210 | ) | $ | (44,303,014 | ) |
Undistributed Ordinary Income |
Undistributed Long-Term Gain |
Total Distributable Earnings |
Other Accumulated (Loss) |
Total Accumulated Gain |
||||||||||||||||
BlueStar Israel | ||||||||||||||||||||
Technology ETF | $ | — | $ | — | $ | — | $ | (14,558,005 | ) | $ | (58,861,019 | ) |
As of September 30, 2022, the Fund’s most recent fiscal year end, the Fund had accumulated capital loss carryovers of:
Capital Loss Carryover ST |
Capital Loss Carryover LT |
Expires | ||||||||||
BlueStar Israel Technology ETF | $ | (8,423,196 | ) | $ | (6,134,402 | ) | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The Fund had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2022, the Fund’s most recent fiscal year end, as follows:
Later Year Ordinary Loss |
Post-October Loss | ||
BlueStar Israel Technology ETF | None | None |
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2022, the following table shows the reclassifications made:
Total Distributable Earnings/(Loss) |
Paid-In Capital |
|||||||
BlueStar Israel Technology ETF | $ | (20,082,738 | ) | $ | 20,082,738 |
The tax character of distributions paid by the Fund during the fiscal years ended September 30, 2022 and September 30, 2021 are as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
From Ordinary Income |
From Capital Gains |
From Ordinary Income |
From Return of Capital |
|||||||||||||
BlueStar Israel Technology ETF | $ | — | $ | — | $ | 993,321 | $ | 117,179 |
NOTE 9 – LEGAL MATTERS
The Trust, the Adviser, and certain officers and affiliated persons of the Adviser (together with the Adviser, the “Adviser Defendants”) were named as defendants in an action filed December 21, 2021, in the Superior Court of New Jersey, Union County, captioned PureShares, LLC, d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. UNN-C-152-21 (the “NJ Action”). The NJ Action asserted breach of contract and other tort claims and sought damages in unspecified amounts and injunctive relief. On May 25, 2022, the court in the NJ Action dismissed with prejudice all claims asserted against the Trust, as well as all contract claims and all except one tort claim asserted against the Adviser Defendants.
As of September 30, 2022, there were no adjustments made to the accompanying financial statements based on the above legal matters.
NOTE 10 – SUBSEQUENT EVENTS
In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the Financial Statements.
BlueStar Israel Technology ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of BlueStar Israel Technology ETF:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of BlueStar Israel Technology ETF (the “Fund”) (a series of ETF Managers Trust) as of September 30, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the periods indicated therein, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of September 30, 2022, and the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor of one or more series of the Trust since 2013.
New York, New York
November 29, 2022
BlueStar Israel Technology ETF
Six Months Ended September 30, 2022 (Unaudited)
As a shareholder of BlueStar Israel Technology ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (April 1, 2022 to September 30, 2022).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
BlueStar Israel Technology ETF
Beginning Account Value April 1, 2022 |
Ending Account Value September 30, 2022 |
Expenses Paid During The Period^ |
Annualized Expense Ratio During Period April 1, 2022 to September 30, 2022 |
||||||||||||||
Actual | $ | 1,000.00 | $ | 784.60 | $ | 3.36 | 0.75 | % | |||||||||
Hypothetical | |||||||||||||||||
(5% annual) | $ | 1,000.00 | $ | 1,021.31 | $ | 3.80 | 0.75 | % |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/365 (to reflect the one-half year period).
BlueStar Israel Technology ETF
September 30, 2022 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of the Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2022, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Fund Name | Qualified Dividend Income |
Bluestar Israel Technology ETF | 0.00% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2022 was as follows:
Fund Name | Dividends Received Deduction |
Bluestar Israel Technology ETF | 0.00% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for the Fund was as follows:
Fund Name | Short-Term Capital Gain |
Bluestar Israel Technology ETF | 0.00% |
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund files a complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters on Part F of Form N-PORT. Once filed, the Fund’s Part F of Form N-PORT is available without charge, upon request on the SEC’s website (www.sec.gov), the Fund’s website (www.etfmgfunds.com) and is available by calling (877) 756-7873. The Fund’s portfolio holdings are posted on the Fund’s website www.etfmgfunds.com daily.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll- free at 1- 844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.etfmgfunds.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
BlueStar Israel Technology ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
BlueStar Israel Technology ETF
Board of Trustees (Continued)
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal
Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
Terry Loebs (1963) | Trustee (since 2014); Lead Independent Trustee (since 2020) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 17 | None |
Eric Wiegel (1960) | Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017- 2018). | 17 | None |
BlueStar Israel Technology ETF
Privacy Policy and Procedures
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) | Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P. |
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S. Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2022
Etho Climate Leadership U.S. ETF
Ticker: ETHO
The fund is a series of ETF Managers Trust.
Etho Climate Leadership U.S. ETF
TABLE OF CONTENTS
September 30, 2022
Etho Climate Leadership U.S. ETF
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the Etho Climate Leadership U.S. Exchange-Traded Fund (“ETHO” or the “Fund”). The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Etho Climate Leadership Index - U.S. (the “Index”).
Market Overview
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and, in many cases, unprecedented volatility and severe losses due to the global pandemic caused by COVID-19. Some sectors of the economy and individual issuers have experienced particularly large losses because of these disruptions. In response to these disruptions, the U.S. government and the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, contributing to inflationary pressure and expectations for inflation. Further, Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict have increased volatility and uncertainty in the financial markets and adversely affect regional and global economies. The full extent and duration of these conditions and the totality of repercussions are impossible to predict but could continue to result in significant market disruptions and may continue to negatively affect global supply chains, inflation and global growth. These and related events have impacted the ETFs’ performance, among other factors, and the value of an investment in the ETFs. We encourage you to talk with your financial advisor and visit etfmg.com for further insight about investing in today’s markets
For the fiscal-year ended September 30, 2022, the total return for the Fund was -21.58% while the total return for the Index was -22.08%. The best performers in the Fund on the basis of contribution to its return were Enphase Energy Inc, H&R Block Inc, First Solar Inc, Vertex Pharmaceuticals Inc and First Horizon Corp while the worst performers Romeo Power Inc, Beyond Meat Inc, Align Technology Inc, Xl Fleet Corp, and Teladoc Health Inc.
During the reporting period, the Fund saw an average approximate allocation of 23.61% to the Information Technology sector, 20.69% to Industrials and 15.21% to Consumer Discretionary. The Fund invests in the United States.
As you may know, the Etho Climate Leadership U.S. ETF offers broad diversification across companies that have demonstrated efficiency and leadership with their use of resources and their supply chains when compared to industry peers. The Fund holds roughly 265 equities equally weighted (at the time of rebalance) and results in a carbon emissions profile that is, on average, 60-80% lower per dollar invested than conventional U.S. benchmark indices. ETHO avoids investment in any direct fossil fuel companies, as well as enablers of that industry, along with a series of other unsustainable industries such as Tobacco/Weapons/Gambling, etc. Equal weighting of the Fund allows for the elimination of equities that do not meet ETHO’s standards without there being a significant impact on the diversification or performance of the Fund. It also creates broad exposure to both the sectors and factors that potentially make for greater stability and higher performance.
There is much ahead for environmentally sustainable and socially responsible investing. We are thankful you have joined us by investing in the Etho Climate Leadership U.S. ETF. You can find further details about ETHO by visiting www.etfmg.com, or by calling 1- 844-ETF-MGRS (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
Etho Climate Leadership U.S. ETF
Growth of $10,000 (Unaudited)
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
5 Year Return |
Since Inception (11/18/2015) |
Value of $10,000 (9/30/2022) |
|||||
Etho Climate Leadership U.S. ETF (NAV) | -21.58% | 8.53% | 10.30% | $ | 19,613 | ||||
Etho Climate Leadership U.S. ETF (Market) | -21.66% | 8.51% | 10.30% | $ | 19,614 | ||||
S&P 500 Index | -15.47% | 9.24% | 10.26% | $ | 19,564 | ||||
Etho Climate Leadership Index - U.S. | -22.08% | 8.07% | 9.76% | $ | 18,960 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more of less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 18,
2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital
gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
Etho Climate Leadership U.S. ETF
Etho Climate Leadership U.S. ETF
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
ETHO
The ETHO Climate Leadership US ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Etho Climate Leadership Index (the “Index”).
The Fund’s return may not match or achieve a high degree of correlation with the return of the Etho Climate Leadership Index — US.
To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
ETF Managers Group LLC serves as the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. Both ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG Financial LLC is not affiliated with Etho Capital.
The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.
Etho Climate Leadership U.S. ETF
As of September 30, 2022 (Unaudited)
Etho Climate Leadership U.S. ETF |
||||
As a percent of Net Assets: | ||||
Bermuda | 0.4 | % | ||
Canada | 0.4 | |||
Ireland | 0.3 | |||
United States | 98.4 | |||
Short-Term and other Net Assets (Liabilities) | 0.5 | |||
100.0 | % |
Etho Climate Leadership U.S. ETF
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 99.5% | ||||||||
Bermuda - 0.4% | ||||||||
Chemicals - 0.4% | ||||||||
Axalta Coating Systems, Ltd. (a) | 27,875 | $ | 587,048 | |||||
Canada - 0.4% | ||||||||
Commercial Services & Supplies - 0.4% | ||||||||
Waste Connections, Inc. | 4,916 | 664,299 | ||||||
Ireland - 0.3% | ||||||||
Health Care Equipment & Supplies - 0.3% | ||||||||
STERIS PLC | 2,838 | 471,903 | ||||||
United States - 98.4% | ||||||||
Air Freight & Logistics - 0.4% | ||||||||
United Parcel Service, Inc. - Class B (b) | 3,230 | 521,774 | ||||||
Auto Components - 0.8% | ||||||||
Gentex Corp. | 23,561 | 561,695 | ||||||
QuantumScape Corp. (a)(b) | 34,276 | 288,261 | ||||||
XL Fleet Corp. (a)(b) | 344,317 | 306,442 | ||||||
Total Auto Components | 1,156,398 | |||||||
Automobiles - 0.4% | ||||||||
Arcimoto, Inc. (a)(b) | 103,659 | 143,049 | ||||||
Tesla, Inc. (a) | 1,907 | 505,832 | ||||||
Total Automobiles | 648,881 | |||||||
Banks - 3.9% | ||||||||
Amalgamated Financial Corp. | 38,350 | 864,792 | ||||||
Bank of Hawaii Corp. | 8,216 | 625,402 | ||||||
Commerce Bancshares, Inc. (b) | 9,596 | 634,871 | ||||||
Cullen/Frost Bankers, Inc. (b) | 4,971 | 657,266 | ||||||
First Horizon Corp. | 29,304 | 671,061 | ||||||
South State Corp. | 8,472 | 670,305 | ||||||
SVB Financial Group (a) | 1,225 | 411,331 | ||||||
Truist Financial Corp. (b) | 12,259 | 533,757 | ||||||
Washington Federal, Inc. | 21,089 | 632,248 | ||||||
Total Banks | 5,701,033 | |||||||
Biotechnology - 1.5% | ||||||||
Agios Pharmaceuticals, Inc. (a)(b) | 23,537 | 665,626 | ||||||
Alnylam Pharmaceuticals, Inc. (a) | 4,196 | 839,872 | ||||||
Vertex Pharmaceuticals, Inc. (a) | 2,626 | 760,332 | ||||||
Total Biotechnology | 2,265,830 | |||||||
Building Products - 2.7% | ||||||||
A.O. Smith Corp. | 10,792 | 524,275 | ||||||
Advanced Drainage Systems, Inc. | 5,771 | 717,740 | ||||||
Apogee Enterprises, Inc. | 14,548 | 556,025 | ||||||
Armstrong World Industries, Inc. | 7,640 | 605,317 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Fortune Brands Home & Security, Inc. | 9,251 | $ | 496,686 | |||||
Lennox International, Inc. | 2,666 | 593,638 | ||||||
Trex Co., Inc. (a) | 10,487 | 460,799 | ||||||
Total Building Products | 3,954,480 | |||||||
Capital Markets - 3.3% | ||||||||
Affiliated Managers Group, Inc. | 4,861 | 543,703 | ||||||
Ares Management Corp. - Class A | 8,496 | 526,327 | ||||||
Charles Schwab Corp. | 8,162 | 586,603 | ||||||
Franklin Resources, Inc. (b) | 24,744 | 532,491 | ||||||
Interactive Brokers Group, Inc. - Class A | 10,407 | 665,111 | ||||||
MarketAxess Holdings, Inc. | 2,021 | 449,652 | ||||||
MSCI, Inc. | 1,367 | 576,587 | ||||||
Northern Trust Corp. | 5,910 | 505,660 | ||||||
T. Rowe Price Group, Inc. | 4,567 | 479,581 | ||||||
Total Capital Markets | 4,865,715 | |||||||
Commercial Services & Supplies - 2.9% | ||||||||
Cintas Corp. | 1,616 | 627,315 | ||||||
Copart, Inc. (a) | 5,461 | 581,050 | ||||||
MillerKnoll, Inc. | 19,917 | 310,705 | ||||||
Pitney Bowes, Inc. | 134,108 | 312,472 | ||||||
Republic Services, Inc. | 5,184 | 705,232 | ||||||
Rollins, Inc. | 19,753 | 685,034 | ||||||
Steelcase, Inc. - Class A (b) | 57,886 | 377,417 | ||||||
Waste Management, Inc. | 4,335 | 694,510 | ||||||
Total Commercial Services & Supplies | 4,293,735 | |||||||
Communications Equipment - 2.1% | ||||||||
Arista Networks, Inc. (a) | 4,930 | 556,548 | ||||||
Ciena Corp. (a) | 11,301 | 456,899 | ||||||
Cisco Systems, Inc. | 12,365 | 494,600 | ||||||
F5 Networks, Inc. (a) | 3,279 | 474,570 | ||||||
Juniper Networks, Inc. | 18,526 | 483,899 | ||||||
Motorola Solutions, Inc. | 2,836 | 635,179 | ||||||
Total Communications Equipment | 3,101,695 | |||||||
Construction & Engineering - 0.9% | ||||||||
Ameresco, Inc. - Class A (a) | 8,618 | 572,925 | ||||||
Infrastructure and Energy Alternatives, Inc. (a)(b) | 57,822 | 782,910 | ||||||
Total Construction & Engineering | 1,355,835 | |||||||
Construction Materials - 0.4% | ||||||||
Vulcan Materials Co. | 3,742 | 590,151 | ||||||
Consumer Finance - 1.0% | ||||||||
Ally Financial, Inc. | 15,941 | 443,638 | ||||||
American Express Co. | 3,673 | 495,524 | ||||||
Discover Financial Services | 6,243 | 567,614 | ||||||
Total Consumer Finance | 1,506,776 | |||||||
Containers & Packaging - 1.1% | ||||||||
AptarGroup, Inc. | 5,859 | 556,781 | ||||||
Avery Dennison Corp. | 3,950 | 642,664 | ||||||
Packaging Corp. of America (b) | 4,416 | 495,873 | ||||||
Total Containers & Packaging | 1,695,318 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Distributors - 1.0% | ||||||||
Genuine Parts Co. | 5,462 | $ | 815,586 | |||||
LKQ Corp. | 15,188 | 716,114 | ||||||
Total Distributors | 1,531,700 | |||||||
Diversified Consumer Services - 1.2% | ||||||||
H&R Block, Inc. (b) | 26,452 | 1,125,268 | ||||||
Service Corp. International | 10,438 | 602,690 | ||||||
Total Diversified Consumer Services | 1,727,958 | |||||||
Diversified Financial Services - 0.8% | ||||||||
Cannae Holdings, Inc. (a) | 28,645 | 591,806 | ||||||
Voya Financial, Inc. (b) | 10,349 | 626,114 | ||||||
Total Diversified Financial Services | 1,217,920 | |||||||
Diversified Telecommunication Services - 0.8% | ||||||||
ATN International, Inc. | 17,226 | 664,407 | ||||||
Verizon Communications, Inc. | 13,569 | 515,215 | ||||||
Total Diversified Telecommunication Services | 1,179,622 | |||||||
Electrical Equipment - 4.7% | ||||||||
Array Technologies, Inc. (a)(b) | 60,797 | 1,008,015 | ||||||
Blink Charging Co. (a)(b) | 25,895 | 458,859 | ||||||
ChargePoint Holdings, Inc. (a)(b) | 34,466 | 508,718 | ||||||
Eos Energy Enterprises, Inc. (a)(b) | 163,921 | 273,748 | ||||||
FuelCell Energy, Inc. (a)(b) | 118,956 | 405,640 | ||||||
Plug Power, Inc. (a)(b) | 23,949 | 503,168 | ||||||
Rockwell Automation, Inc. | 2,463 | 529,816 | ||||||
Romeo Power, Inc. (a) | 459,860 | 183,944 | ||||||
Shoals Technologies Group, Inc. - Class A (a) | 40,211 | 866,547 | ||||||
Stem, Inc. (a) | 62,233 | 830,188 | ||||||
SunPower Corp. (a)(b) | 31,899 | 734,953 | ||||||
Sunrun, Inc. (a)(b) | 22,561 | 622,458 | ||||||
Total Electrical Equipment | 6,926,054 | |||||||
Electronic Equipment, Instruments & Components - 3.5% | ||||||||
Badger Meter, Inc. | 6,884 | 636,013 | ||||||
CDW Corp. | 3,838 | 599,035 | ||||||
IPG Photonics Corp. (a)(b) | 6,242 | 526,513 | ||||||
Itron, Inc. (a) | 13,006 | 547,683 | ||||||
Keysight Technologies, Inc. (a) | 4,337 | 682,469 | ||||||
Littelfuse, Inc. | 2,750 | 546,398 | ||||||
National Instruments Corp. | 17,061 | 643,882 | ||||||
Trimble, Inc. (a) | 9,498 | 515,456 | ||||||
Zebra Technologies Corp. - Class A (a) | 1,655 | 433,627 | ||||||
Total Electronic Equipment, Instruments & Components | 5,131,076 | |||||||
Entertainment - 1.3% | ||||||||
Liberty Media Corp-Liberty Formula One - Class C (a)(b) | 9,811 | 573,943 | ||||||
Live Nation Entertainment, Inc. (a)(b) | 5,824 | 442,857 | ||||||
Netflix, Inc. (a)(b) | 1,829 | 430,620 | ||||||
Walt Disney Co. (a) | 4,996 | 471,273 | ||||||
Total Entertainment | 1,918,693 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Food & Staples Retailing - 0.7% | ||||||||
PriceSmart, Inc. | 8,728 | $ | 502,646 | |||||
Sysco Corp. | 8,425 | 595,731 | ||||||
Total Food & Staples Retailing | 1,098,377 | |||||||
Food Products - 1.3% | ||||||||
Beyond Meat, Inc. (a)(b) | 14,183 | 200,973 | ||||||
Hain Celestial Group, Inc. (a) | 19,918 | 336,216 | ||||||
Lamb Weston Holdings, Inc. | 11,490 | 889,097 | ||||||
McCormick & Co., Inc. | 6,887 | 490,836 | ||||||
Total Food Products | 1,917,122 | |||||||
Health Care Equipment & Supplies - 2.4% | ||||||||
ABIOMED, Inc. (a) | 2,068 | 508,024 | ||||||
Align Technology, Inc. (a) | 1,571 | 325,370 | ||||||
Cooper Cos. | 1,640 | 432,796 | ||||||
DexCom, Inc. (a) | 5,357 | 431,453 | ||||||
Edwards Lifesciences Corp. (a) | 5,820 | 480,907 | ||||||
IDEXX Laboratories, Inc. (a) | 1,252 | 407,902 | ||||||
ResMed, Inc. | 2,833 | 618,443 | ||||||
Teleflex, Inc. | 1,934 | 389,624 | ||||||
Total Health Care Equipment & Supplies | 3,594,519 | |||||||
Health Care Providers & Services - 2.0% | ||||||||
AMN Healthcare Services, Inc. (a) | 6,567 | 695,839 | ||||||
Henry Schein, Inc. (a) | 7,858 | 516,821 | ||||||
Molina Healthcare, Inc. (a) | 2,054 | 677,491 | ||||||
Patterson Cos., Inc. | 21,406 | 514,172 | ||||||
Quest Diagnostics, Inc. (b) | 5,023 | 616,272 | ||||||
Total Health Care Providers & Services | 3,020,595 | |||||||
Health Care Technology - 0.2% | ||||||||
Teladoc Health, Inc. (a)(b) | 9,499 | 240,800 | ||||||
Hotels, Restaurants & Leisure - 1.7% | ||||||||
Booking Holdings, Inc. (a) | 291 | 478,174 | ||||||
Chipotle Mexican Grill, Inc. (a)(b) | 432 | 649,192 | ||||||
Expedia Group, Inc. (a) | 3,501 | 328,009 | ||||||
Hilton Worldwide Holdings, Inc. | 4,519 | 545,082 | ||||||
Marriott International, Inc. - Class A | 3,909 | 547,807 | ||||||
Total Hotels, Restaurants & Leisure | 2,548,264 | |||||||
Household Durables - 1.7% | ||||||||
DR Horton, Inc. | 9,236 | 622,045 | ||||||
NVR, Inc. (a) | 153 | 610,023 | ||||||
Tempur Sealy International, Inc. (b) | 24,672 | 595,582 | ||||||
TopBuild Corp. (a) | 3,777 | 622,374 | ||||||
Total Household Durables | 2,450,024 | |||||||
Household Products - 0.3% | ||||||||
Church & Dwight Co., Inc. | 6,922 | 494,508 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Independent Power and Renewable Electricity Producers - 1.3% | ||||||||
Clearway Energy, Inc. - Class A | 20,717 | $ | 602,865 | |||||
Ormat Technologies, Inc. | 8,390 | 723,218 | ||||||
Sunnova Energy International, Inc. (a)(b) | 29,713 | 656,063 | ||||||
Total Independent Power and Renewable Electricity Producers | 1,982,146 | |||||||
Insurance - 2.7% | ||||||||
Cincinnati Financial Corp. | 5,060 | 453,224 | ||||||
Citizens, Inc. (a)(b) | 161,602 | 539,751 | ||||||
Globe Life, Inc. | 6,821 | 680,054 | ||||||
Hartford Financial Services Group, Inc. | 9,577 | 593,199 | ||||||
MBIA, Inc. (a) | 44,521 | 409,593 | ||||||
MetLife, Inc. | 9,854 | 598,926 | ||||||
W R Berkley Corp. | 10,355 | 668,726 | ||||||
Total Insurance | 3,943,473 | |||||||
Interactive Media & Services - 0.6% | ||||||||
Alphabet, Inc. - Class A (a) | 4,926 | 471,172 | ||||||
IAC, Inc. (a) | 6,832 | 378,356 | ||||||
Total Interactive Media & Services | 849,528 | |||||||
Internet & Direct Marketing Retail - 0.6% | ||||||||
Amazon.com, Inc. (a) | 4,203 | 474,939 | ||||||
eBay, Inc. | 12,004 | 441,867 | ||||||
Total Internet & Direct Marketing Retail | 916,806 | |||||||
IT Services - 4.6% | ||||||||
Akamai Technologies, Inc. (a) | 5,738 | 460,876 | ||||||
Broadridge Financial Solutions, Inc. | 4,414 | 637,029 | ||||||
Fidelity National Information Services, Inc. | 6,844 | 517,201 | ||||||
Fiserv, Inc. (a) | 6,757 | 632,252 | ||||||
Gartner, Inc. (a) | 2,302 | 636,940 | ||||||
Global Payments, Inc. | 5,014 | 541,763 | ||||||
Jack Henry & Associates, Inc. (b) | 3,483 | 634,846 | ||||||
MasterCard, Inc. - Class A | 1,918 | 545,364 | ||||||
Paychex, Inc. | 5,065 | 568,344 | ||||||
PayPal Holdings, Inc. (a) | 5,924 | 509,879 | ||||||
VeriSign, Inc. (a) | 3,080 | 534,996 | ||||||
Visa, Inc. - Class A (b) | 3,097 | 550,182 | ||||||
Total IT Services | 6,769,672 | |||||||
Leisure Products - 0.4% | ||||||||
Hasbro, Inc. | 8,462 | 570,508 | ||||||
Life Sciences Tools & Services - 2.7% | ||||||||
Bio-Rad Laboratories, Inc. - Class A (a) | 1,217 | 507,659 | ||||||
Bio-Techne Corp. | 1,583 | 449,572 | ||||||
Danaher Corp. | 2,337 | 603,623 | ||||||
Illumina, Inc. (a) | 1,960 | 373,948 | ||||||
IQVIA Holdings, Inc. (a) | 2,963 | 536,718 | ||||||
Mettler-Toledo International, Inc. (a) | 498 | 539,892 | ||||||
Waters Corp. (a) | 2,207 | 594,853 | ||||||
West Pharmaceutical Services, Inc. | 1,670 | 410,954 | ||||||
Total Life Sciences Tools & Services | 4,017,219 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Machinery - 3.5% | ||||||||
Deere & Co. (b) | 1,653 | $ | 551,920 | |||||
Fortive Corp. | 11,254 | 656,108 | ||||||
Hyliion Holdings Corp. (a)(b) | 154,670 | 443,903 | ||||||
Hyzon Motors, Inc. (a) | 107,228 | 182,288 | ||||||
Illinois Tool Works, Inc. | 3,287 | 593,797 | ||||||
Lightning eMotors, Inc. (a)(b) | 120,209 | 186,324 | ||||||
Microvast Holdings, Inc. (a) | 102,267 | 185,103 | ||||||
Proterra, Inc. (a)(b) | 91,115 | 453,753 | ||||||
Watts Water Technologies, Inc. - Class A | 4,916 | 618,089 | ||||||
Westinghouse Air Brake Technologies Corp. (b) | 7,141 | 580,920 | ||||||
Xylem, Inc. | 8,056 | 703,771 | ||||||
Total Machinery | 5,155,976 | |||||||
Media - 1.6% | ||||||||
Interpublic Group of Cos., Inc. | 19,451 | 497,946 | ||||||
John Wiley & Sons, Inc. - Class A | 12,986 | 487,754 | ||||||
Liberty Broadband Corp. - Class C (a) | 5,063 | 373,649 | ||||||
New York Times Co. - Class A | 14,979 | 430,646 | ||||||
TEGNA, Inc. | 30,682 | 634,504 | ||||||
Total Media | 2,424,499 | |||||||
Oil, Gas & Consumable Fuels - 0.4% | ||||||||
Enviva, Inc. | 8,812 | 529,249 | ||||||
Personal Products - 0.4% | ||||||||
Estee Lauder Cos., Inc. - Class A | 2,520 | 544,068 | ||||||
Pharmaceuticals - 1.7% | ||||||||
Bristol-Myers Squibb Co. | 9,428 | 670,237 | ||||||
Merck & Co., Inc. | 8,398 | 723,235 | ||||||
Pfizer, Inc. | 13,383 | 585,640 | ||||||
Zoetis, Inc. | 3,641 | 539,924 | ||||||
Total Pharmaceuticals | 2,519,036 | |||||||
Professional Services - 1.2% | ||||||||
Insperity, Inc. | 6,848 | 699,112 | ||||||
Robert Half International, Inc. | 6,021 | 460,607 | ||||||
Verisk Analytics, Inc. | 3,196 | 545,014 | ||||||
Total Professional Services | 1,704,733 | |||||||
Real Estate Investment Trusts (REITs) - 3.7% | ||||||||
AvalonBay Communities, Inc. | 2,774 | 510,943 | ||||||
Camden Property Trust | 4,142 | 494,762 | ||||||
Four Corners Property Trust, Inc. | 25,559 | 618,272 | ||||||
Gladstone Land Corp. | 18,905 | 342,181 | ||||||
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (b) | 14,547 | 435,392 | ||||||
Kimco Realty Corp. | 27,910 | 513,823 | ||||||
Prologis, Inc. | 4,264 | 433,222 | ||||||
Public Storage, Inc. | 1,813 | 530,865 | ||||||
Regency Centers Corp. | 9,678 | 521,161 | ||||||
SBA Communications Corp. | 1,994 | 567,591 | ||||||
UDR, Inc. | 12,013 | 501,062 | ||||||
Total Real Estate Investment Trusts (REITs) | 5,469,274 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Road & Rail - 1.6% | ||||||||
AMERCO (b) | 1,148 | $ | 584,585 | |||||
JB Hunt Transport Services, Inc. | 3,423 | 535,426 | ||||||
Landstar System, Inc. | 4,554 | 657,460 | ||||||
Old Dominion Freight Line, Inc. | 2,295 | 570,927 | ||||||
Total Road & Rail | 2,348,398 | |||||||
Semiconductors & Semiconductor Equipment - 6.9% | ||||||||
Advanced Micro Devices, Inc. (a) | 6,266 | 397,014 | ||||||
Analog Devices, Inc. | 4,162 | 579,933 | ||||||
Applied Materials, Inc. | 5,207 | 426,610 | ||||||
Broadcom, Inc. | 1,094 | 485,747 | ||||||
Enphase Energy, Inc. (a) | 3,396 | 942,288 | ||||||
First Solar, Inc. (a)(b) | 8,182 | 1,082,233 | ||||||
Intel Corp. | 13,999 | 360,754 | ||||||
KLA Corp. | 1,880 | 568,944 | ||||||
Lam Research Corp. | 1,277 | 467,382 | ||||||
Micron Technology, Inc. | 8,808 | 441,281 | ||||||
NVIDIA Corp. | 2,511 | 304,810 | ||||||
ON Semiconductor Corp. (a) | 10,944 | 682,140 | ||||||
Power Integrations, Inc. | 7,404 | 476,225 | ||||||
Qorvo, Inc. (a) | 5,521 | 438,423 | ||||||
QUALCOMM, Inc. | 4,500 | 508,410 | ||||||
Rambus, Inc. (a) | 21,485 | 546,149 | ||||||
Teradyne, Inc. (b) | 5,799 | 435,795 | ||||||
Texas Instruments, Inc. | 3,769 | 583,366 | ||||||
Universal Display Corp. | 4,112 | 387,967 | ||||||
Total Semiconductors & Semiconductor Equipment | 10,115,471 | |||||||
Software - 5.2% | ||||||||
Adobe Systems, Inc. (a) | 1,503 | 413,626 | ||||||
Ansys, Inc. (a) | 2,156 | 477,985 | ||||||
Autodesk, Inc. (a) | 3,196 | 597,013 | ||||||
Cadence Design System, Inc. (a) | 4,166 | 680,850 | ||||||
Dolby Laboratories, Inc. - Class A | 8,780 | 572,017 | ||||||
Fortinet, Inc. (a) | 10,024 | 492,479 | ||||||
Intuit, Inc. | 1,426 | 552,318 | ||||||
Microsoft Corp. | 2,229 | 519,134 | ||||||
NCR Corp. (a) | 17,048 | 324,082 | ||||||
Paycom Software, Inc. (a) | 1,977 | 652,390 | ||||||
Salesforce, Inc. (a) | 3,227 | 464,172 | ||||||
ServiceNow, Inc. (a) | 1,230 | 464,460 | ||||||
Tyler Technologies, Inc. (a) | 1,540 | 535,150 | ||||||
Workday, Inc. - Class A (a)(b) | 2,861 | 435,501 | ||||||
Zoom Video Communications, Inc. - Class A (a)(b) | 5,845 | 430,134 | ||||||
Total Software | 7,611,311 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Specialty Retail - 5.7% | ||||||||
Advance Auto Parts, Inc. (b) | 3,331 | $ | 520,769 | |||||
American Eagle Outfitters, Inc. (b) | 41,232 | 401,187 | ||||||
America’s Car-Mart, Inc. (a) | 8,504 | 518,914 | ||||||
AutoNation, Inc. (a)(b) | 6,880 | 700,866 | ||||||
Best Buy Co., Inc. | 7,602 | 481,511 | ||||||
EVgo, Inc. (a)(b) | 53,280 | 421,445 | ||||||
Foot Locker, Inc. (b) | 23,587 | 734,262 | ||||||
Group 1 Automotive, Inc. (b) | 4,088 | 584,053 | ||||||
Lowe’s Cos., Inc. | 3,412 | 640,808 | ||||||
Penske Automotive Group, Inc. (b) | 7,357 | 724,150 | ||||||
Ross Stores, Inc. | 7,594 | 639,946 | ||||||
TJX Cos., Inc. | 11,389 | 707,485 | ||||||
Tractor Supply Co. (b) | 2,956 | 549,461 | ||||||
Volta, Inc. (a)(b) | 224,653 | 271,830 | ||||||
Williams-Sonoma, Inc. (b) | 4,762 | 561,202 | ||||||
Total Specialty Retail | 8,457,889 | |||||||
Technology Hardware, Storage & Peripherals - 1.6% | ||||||||
3D Systems Corp. (a)(b) | 41,078 | 327,802 | ||||||
Apple, Inc. | 3,932 | 543,403 | ||||||
Hewlett Packard Enterprise Co. | 41,241 | 494,067 | ||||||
NetApp, Inc. | 8,301 | 513,417 | ||||||
Western Digital Corp. (a) | 13,800 | 449,190 | ||||||
Total Technology Hardware, Storage & Peripherals | 2,327,879 | |||||||
Textiles, Apparel & Luxury Goods - 1.6% | ||||||||
Fossil Group, Inc. (a) | 71,077 | 243,083 | ||||||
Hanesbrands, Inc. (b) | 46,404 | 322,972 | ||||||
PVH Corp. (b) | 8,946 | 400,781 | ||||||
Ralph Lauren Corp. (b) | 6,074 | 515,865 | ||||||
Tapestry, Inc. | 18,538 | 527,035 | ||||||
VF Corp. (b) | 12,135 | 362,958 | ||||||
Total Textiles, Apparel & Luxury Goods | 2,372,694 | |||||||
Thrifts & Mortgage Finance - 1.1% | ||||||||
Capitol Federal Financial, Inc. | 64,674 | 536,794 | ||||||
New York Community Bancorp, Inc. (b) | 65,485 | 558,587 | ||||||
TFS Financial Corp. | 41,837 | 543,881 | ||||||
Total Thrifts & Mortgage Finance | 1,639,262 | |||||||
Trading Companies & Distributors - 2.3% | ||||||||
Fastenal Co. | 11,631 | 535,491 | ||||||
Herc Holdings, Inc. | 4,129 | 428,921 | ||||||
MSC Industrial Direct Co., Inc. - Class A | 8,149 | 593,329 | ||||||
United Rentals, Inc. (a) | 1,929 | 521,061 | ||||||
W.W. Grainger, Inc. (b) | 1,334 | 652,579 | ||||||
WESCO International, Inc. (a)(b) | 5,265 | 628,536 | ||||||
Total Trading Companies & Distributors | 3,359,917 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2022 (Continued)
Percentages are stated as a percent of net assets.
(a) Non-income producing security.
(b) This security or a portion of this security was out on loan at September 30, 2022.
(c) The rate shown is the annualized seven-day yield at period end.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2022
Etho Climate Leadership U.S. ETF |
||||
ASSETS | ||||
Investments in securities, at value* | $ | 177,941,942 | ||
Receivables: | ||||
Dividends and interest receivable | 114,861 | |||
Securities lending income receivable | 28,793 | |||
Total Assets | 178,085,596 | |||
LIABILITIES | ||||
Collateral received for securities loaned (Note 7) | 30,356,003 | |||
Payables: | ||||
Management fees payable | 59,429 | |||
Total Liabilities | 30,415,432 | |||
Net Assets | $ | 147,670,164 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in capital | $ | 183,084,823 | ||
Total Distributable Earnings (Accumulated Losses) | (35,414,659 | ) | ||
Net Assets | $ | 147,670,164 | ||
*Identified Cost: | ||||
Investments in securities | $ | 203,296,428 | ||
Shares Outstanding^ | 3,200,000 | |||
Net Asset Value, Offering and Redemption Price per Share | $ | 46.15 |
^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
For the Year Ended September 30, 2022
Etho Climate Leadership U.S. ETF |
||||
INVESTMENT INCOME | ||||
Income: | ||||
Dividends from unaffiliated securities (net of foreign witholding tax of $436) | $ | 2,156,736 | ||
Interest | 10,289 | |||
Securities lending income | 251,893 | |||
Total Investment Income | 2,418,918 | |||
Expenses: | ||||
Management fees | 795,259 | |||
Total Expenses | 795,259 | |||
Net Investment Income | 1,623,659 | |||
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
Net Realized Gain (Loss) on: | ||||
Unaffiliated investments | (5,655,257 | ) | ||
In-Kind redemptions | 14,703,965 | |||
Net Realized Gain on Investments and In-Kind Redemptions | 9,048,708 | |||
Net Change in Unrealized Appreciation/Depreciation of: | ||||
Unaffiliated investments | (52,481,644 | ) | ||
Net Change in Unrealized Appreciation/Depreciation of Investments | (52,481,644 | ) | ||
Net Realized and Unrealized Loss on Investments | (43,432,936 | ) | ||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (41,809,277 | ) |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment income | $ | 1,623,659 | $ | 1,122,668 | ||||
Net realized gain on investments and In-Kind Redemptions | 9,048,708 | 24,800,863 | ||||||
Net change in unrealized appreciation/depreciation of investments | (52,481,644 | ) | 9,213,851 | |||||
Net increase (decrease) in net assets resulting from operations | (41,809,277 | ) | 35,137,382 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total Distributions to Shareholders | (1,482,849 | ) | (1,179,000 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets derived from net change in outstanding shares | 12,892,115 | 53,551,110 | ||||||
Net increase (decrease) in net assets | (30,400,011 | ) | 87,509,492 | |||||
NET ASSETS | ||||||||
Beginning of Year | 178,070,175 | 90,560,683 | ||||||
End of Year | $ | 147,670,164 | $ | 178,070,175 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 1,000,000 | $ | 57,868,130 | 2,100,000 | $ | 120,572,535 | ||||||||||
Shares Redeemed | (800,000 | ) | (44,976,015 | ) | (1,150,000 | ) | (67,021,425 | ) | ||||||||
Net Transactions in Fund Shares | 200,000 | $ | 12,892,115 | 950,000 | $ | 53,551,110 | ||||||||||
Beginning Shares | 3,000,000 | 2,050,000 | ||||||||||||||
Ending Shares | 3,200,000 | 3,000,000 |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
For a capital share outstanding throughout the year
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, 2018 |
||||||||||||||||
Net Asset Value, Beginning of Year | $ | 59.36 | $ | 44.18 | $ | 39.58 | $ | 37.50 | $ | 32.01 | ||||||||||
Income from Investment Operations: | ||||||||||||||||||||
Net Investment Income 1 | 0.52 | 0.47 | 0.41 | 0.33 | 0.29 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | (13.26 | ) | 15.17 | 4.54 | 2.08 | 5.51 | ||||||||||||||
Total from investment operations | (12.74 | ) | 15.64 | 4.95 | 2.41 | 5.80 | ||||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | (0.47 | ) | (0.46 | ) | (0.35 | ) | (0.33 | ) | (0.29 | ) | ||||||||||
Net realized gains | — | — | — | — | (0.02 | ) | ||||||||||||||
Total distributions | (0.47 | ) | (0.46 | ) | (0.35 | ) | (0.33 | ) | (0.31 | ) | ||||||||||
Net assets value, end of year | $ | 46.15 | $ | 59.36 | $ | 44.18 | $ | 39.58 | $ | 37.50 | ||||||||||
Total Return | (21.58 | )% | 35.48 | % | 12.59 | % | 6.53 | % | 18.16 | % | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end of year (000’s) | $ | 147,670 | $ | 178,070 | $ | 90,561 | $ | 53,431 | $ | 35,627 | ||||||||||
Expenses to Average Net Assets | 0.45 | % | 0.45 | % | 0.45 | % | 0.45 | % | 0.45 | % | ||||||||||
Net Investment Income to Average Net Assets | 0.92 | % | 0.83 | % | 1.00 | % | 0.88 | % | 0.82 | % | ||||||||||
Portfolio Turnover Rate | 30 | % | 45 | % | 37 | % | 41 | % | 19 | % |
1 | Calculated based on average shares outstanding during the year. |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
September 30, 2022
NOTE 1 – ORGANIZATION
Etho Climate Leadership U.S. ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Etho Climate Leadership Index – U.S. (“the Index”). The Fund commenced operations on November 18, 2015.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Fund may invest in certain other investment companies (underlying funds) . For more information about the underlying fund’s operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the SEC.
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by ETF Managers Group, LLC (the “Adviser”), using procedures adopted by the Board of Trustees (the “Board”) . When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2022, the Fund did not hold any securities fair valued by the Adviser.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The following table presents a summary of the inputs used to value the Fund’s net assets as of September 30, 2022:
Etho Climate Leadership U.S. ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 146,987,209 | $ | — | $ | — | $ | 146,987,209 | ||||||||
Short-Term Investments | 598,730 | — | — | 598,730 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 30,356,003 | ||||||||||||
Total Investments in Securities | $ | 147,585,939 | $ | — | $ | — | $ | 177,941,942 |
^ See Schedule of Investments for classifications by sector or country.
* Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments.
B. | Federal Income Taxes. The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Fund’s 2022 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
As of September 30, 2022, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, generally a range of three to four years from the date of filing) as applicable to the Fund, and has determined that no provision for income tax is required in the Fund’s financial statements.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries. |
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
D. | Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income, if any, are declared and paid by the Fund on a quarterly basis. Distributions to shareholders from net realized gains on securities of the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
G. | Share Valuation. The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding by the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in the Etho Climate Leadership U.S. ETF may involve certain risks, as discussed in the Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Fund is not actively managed. Therefore, the Fund follows the securities included in its respective index during upturns as well as downturns. Because of its indexing strategy, the Fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Fund’s expenses, the Fund’s performance may be below that of its index.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that the Fund’s or its underlying index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the Fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Fund and its investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under these circumstances, the Fund may have difficulty achieving its investment objective which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Fund’s third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Fund to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on the Fund’s performance, resulting in losses to the Fund.
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Fund.
A complete description of the principal risks is included in the Fund’s prospectus under the heading “Principal Investment Risks.”
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 4 – MANAGEMENT AND CONTRACTS
The Adviser serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Adviser, the Adviser provides investment advice to the Fund and oversees the day-today operations of the Fund, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Adviser is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Fund to operate.
Under the Investment Advisory Agreement with the Fund, the Adviser has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Adviser bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Adviser at an annual rate of 0.45% of the Fund’s average daily net assets. Under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Fund, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Adviser has entered into an agreement with its affiliate, ETFMG Financial, LLC, to serve as distributor to the Fund (the “Distributor”). The Distributor provides marketing support for the Fund, including distributing marketing materials related to the Fund.
The Adviser has entered into an Agreement with Etho Capital, LLC ( “Etho”), under which Etho agrees to sublicense the use of the Underlying Index to the Adviser. Etho also provides marketing support for the Fund. Etho does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment Adviser to the Fund.
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Fund. The Adviser compensates the Administrator for these services under an administration agreement between the two parties.
The Adviser pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Adviser for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b- 1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended September 30, 2022, the Fund did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the year ended September 30, 2022:
Purchases | Sales | |||||||
Etho Climate Leadership U.S. ETF | $ | 52,194,428 | $ | 51,562,900 |
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the year ended September 30, 2022:
Purchases In- Kind |
Sales In- Kind |
|||||||
Etho Climate Leadership U.S. ETF | $ | 56,985,796 | $ | 44,456,571 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the determination of the Fund’s taxable gains and are not distributed to shareholders. There were no purchases or sales of U.S. Government obligations for the six months ended September 30, 2022.
NOTE 7 — SECURITIES LENDING
The Fund may lend up to 33 1⁄3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations either directly on behalf of the Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Adviser; however, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies, in which the Fund may invest cash collateral, can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Adviser. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
As of September 30, 2022, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
Fund | Values of Securities on Loan |
Fund Collateral Received* |
||||||
Etho Climate Leadership U.S. ETF | $ | 29,242,742 | $ | 30,356,003 |
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio as shown on the Schedule of Investments, an investment with an overnight and continuous maturity.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2022, were as follows:
Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
Etho Climate Leadership U.S. ETF | $ | 205,512,383 | $ | 11,876,629 | $ | (39,447,070 | ) | $ | (27,570,441 | ) |
Undistributed Ordinary Income |
Undistributed Long-Term Gain |
Total Distributable Earnings |
Other Accumulated (Loss) |
Total Accumulated Gain |
||||||||||||||||
Etho Climate Leadership U.S. ETF | $ | 172,725 | $ | — | $ | 172,725 | $ | (8,016,943 | ) | $ | (35,414,659 | ) |
As of September 30, 2022, the Fund had accumulated capital loss carryovers of:
Capital Loss Carryover ST |
Capital Loss Carryover LT |
Expires | ||||||||||
Etho Climate Leadership U.S. ETF | $ | (8,013,002 | ) | $ | — | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The Fund had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2022.
Later Year Ordinary Loss | Post-October Loss | |||
Etho Climate Leadership U.S. ETF | None | None |
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2022, the following table shows the reclassifications made:
Total Distributable Earnings/(Loss) |
Paid-In Capital |
|||||||
ETHO Climate Leadership U.S. ETF | $ | (14,310,179 | ) | $ | 14,310,179 |
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The tax character of distributions paid by the Fund during the fiscal years ended September 30, 2022 and September 30, 2021 are as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
From Ordinary Income |
From Capital Gains |
From Ordinary Income |
From Capital Gains |
|||||||||||||
Etho Climate Leadership U.S. ETF | $ | 1,482,849 | $ | — | $ | 1,179,000 | $ | — |
NOTE 9 – LEGAL MATTERS
The Trust, the Adviser, and certain officers and affiliated persons of the Adviser (together with the Adviser, the “Adviser Defendants”) were named as defendants in an action filed December 21, 2021, in the Superior Court of New Jersey, Union County, captioned PureShares, LLC, d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. UNN-C-152-21 (the “NJ Action”). The NJ Action asserted breach of contract and other tort claims and sought damages in unspecified amounts and injunctive relief. On May 25, 2022, the court in the NJ Action dismissed with prejudice all claims asserted against the Trust, as well as all contract claims and all except one tort claim asserted against the Adviser Defendants.
As of September 30, 2022, there were no adjustments made to the accompanying financial statements based on the above legal matters.
NOTE 10 – SUBSEQUENT EVENTS
In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the Financial Statements.
Etho Climate Leadership U.S. ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of Etho Climate Leadership U.S. ETF:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Etho Climate Leadership U.S. ETF (the “Fund”) (a series of ETF Managers Trust) as of September 30, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of September 30, 2022, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor for one or more series of the Trust since 2013.
New York, New York
November 29, 2022
Etho Climate Leadership U.S. ETF
Expense Example
Six Months Ended September 30, 2022 (Unaudited)
As a shareholder of Etho Climate Leadership U.S. ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (April 1, 2022 to September 30, 2022).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
Etho Climate Leadership U.S. ETF
Beginning Account Value April 1, 2022 |
Ending Account Value September 30, 2022 |
Expenses Paid During the Period^ |
Annualized Expense Ratio During Period April 1, 2022 to September 30, 2022 |
|||||||||||||
Actual | $ | 1,000.00 | $ | 794.70 | $ | 2.02 | 0.45 | % | ||||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,022.81 | $ | 2.28 | 0.45 | % |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/365 (to reflect the one-half year period).
Etho Climate Leadership U.S. ETF
September 30, 2022 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of the Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2022, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Fund Name | Qualified Dividend Income |
Etho Climate Leadership U.S. ETF | 100% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2022 was as follows:
Fund Name | Dividends Received Deduction |
Etho Climate Leadership U.S. ETF | 100% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for the Fund were as follows:
Fund Name | Short-Term Capital Gain |
Etho Climate Leadership U.S. ETF | 0% |
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund files a complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters on Part F of Form N-PORT. Once filed, the Fund’s Part F of Form N-PORT is available without charge, upon request on the SEC’s website (www.sec.gov), the Fund’s website (www.etfmgfunds.com) and is available by calling (877) 756-7873. The Fund’s portfolio holdings are posted on the Fund’s website at www.etfmgfunds.com daily.
Etho Climate Leadership U.S. ETF
SUPPLEMENTARY INFORMATION
September 30, 2022 (Unaudited) (Continued)
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.etfmgfunds.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
Etho Climate Leadership U.S. ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
Etho Climate Leadership U.S. ETF
Board of Trustees (Continued)
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal
Occupation(s) During Past 5 Years |
Number
of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
Terry Loebs (1963) |
Trustee (since 2014); Lead Independent Trustee (since 2020) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 17 | None |
Eric Wiegel (1960) |
Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018). | 17 | None |
Etho Climate Leadership U.S. ETF
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S. Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2022
AI
Powered Equity ETF
Ticker: AIEQ
The fund is a series of ETF Managers Trust.
AI Powered Equity ETF
TABLE OF CONTENTS
September 30, 2022
AI Powered Equity ETF
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the AI Powered Equity Exchange-Traded Fund (“AIEQ” or the “Fund”). The following information pertains to the fiscal period from October 1, 2021 to September 30, 2022.
Market Overview
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and, in many cases, unprecedented volatility and severe losses due to the global pandemic caused by COVID-19. Some sectors of the economy and individual issuers have experienced particularly large losses because of these disruptions. In response to these disruptions, the U.S. government and the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, contributing to inflationary pressure and expectations for inflation. Further, Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict have increased volatility and uncertainty in the financial markets and adversely affect regional and global economies. The full extent and duration of these conditions and the totality of repercussions are impossible to predict but could continue to result in significant market disruptions and may continue to negatively affect global supply chains, inflation and global growth. These and related events have impacted the ETFs’ performance, among other factors, and the value of an investment in the ETFs. We encourage you to talk with your financial advisor and visit etfmg.com for further insight about investing in today’s markets.
The AI Powered Equity ETF is actively managed and seeks capital appreciation. Over the fiscal-year ended September 30, 2022, the total return for the Fund was -28.45%, while the total return for its benchmark, the S&P 500 Index, was -15.47%. The best performers in the Fund on the basis of contribution to return were Livent Corp, Cheniere Energy Inc, Microsoft Corp, Wolfspeed Inc and Autodesk Inc, while the worst performers were Nvidia Corp, Novavax Inc, Moderna Inc, Antero Resources Corp and Tesla Inc.
During the reporting period, the Fund saw an average approximate allocation of 23.14% to the Energy sector, 16.59% to Consumer Discretionary, and 15.68% to Health Care. The portfolio holdings of the Fund are solely exposed to the United States.
AIEQ invests primarily in equity securities listed on a U.S. exchange based on the results of a proprietary, quantitative model developed by EquBot LLC that runs on the Watson™ platform. Each day, the EquBot Model ranks each company based on the probability of the company benefiting from current economic conditions, trends, and world events and identifies approximately 30 to 150 companies with the greatest potential over the next twelve months for appreciation and weights those companies to seek a level of volatility comparable to that of the broader U.S. equity market. EquBot, the Fund’s sub-adviser, is a technology-based company focused on applying artificial intelligence (“AI”) based solutions to investment analyses.
You can find further details about AIEQ by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
AI Powered Equity ETF
Average Annual Returns Year Ended September 30, 2022 |
1 Year Return |
3 Year Return |
Since Inception (10/17/17) |
Value of $10,000 (9/30/2022) |
||||||||||||
AI Powered Equity ETF (NAV) | -28.45 | % | 4.18 | % | 5.59 | % | $ | 13,091 | ||||||||
AI Powered Equity ETF (Market) | -28.50 | % | 4.29 | % | 5.50 | % | $ | 13,038 | ||||||||
S&P 500 Index | -15.47 | % | 8.16 | % | 8.96 | % | $ | 15,300 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on October 17, 2017, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The index returns do not reflect fees or expenses and are not available for direct investment.
AI Powered Equity ETF
Top Ten Holdings as of September 30, 2022 (Unaudited)*
Security |
% of Total Investments |
||
1 | Five Below, Inc. | 5.61% | |
2 | Antero Resources Corp. | 3.93% | |
3 | Sunnova Energy International, Inc. | 3.04% | |
4 | Moderna, Inc. | 2.99% | |
5 | Mosaic Co. | 1.94% | |
6 | American Express Co. | 1.90% | |
7 | Lantheus Holdings, Inc. | 1.74% | |
8 | NXP Semiconductors NV | 1.54% | |
9 | Novavax, Inc. | 1.52% | |
10 | Bumble, Inc. | 1.47% | |
Top Ten Holdings = 25.68% of Total Investments | |||
* Current Fund holdings may not be indicative of future Fund holdings. |
AI Powered Equity ETF
Important Disclosures and Key Risks Factors
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
AIEQ
The AI Powered Equity ETF (the “Fund”) seeks long-term capital appreciation within risk constraints commensurate with broad market U.S. equity indices.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The equity securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors that affect securities markets generally or factors affecting specific issuers, industries, or sectors in which the Fund invests such as political, market and economic developments, as well as events that impact specific issuers.
The Fund is actively-managed and may not meet its investment objective based on the success or failure of a proprietary, quantitative model (the “Equbot Model”) that runs on the IBM WatsonTM platform to identify investment opportunities. Fund holdings are subject to change. For full holdings information, please visit www.etfmg.com.
The portfolio managers may actively and frequently trade securities or other instruments in the Fund’s portfolio to carry out its investment strategies. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.
Some of the models used by the Adviser for the Fund are predictive in nature. The use of predictive models has inherent risks. When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. For example, by relying on Models and Data, the Adviser may be induced to buy certain investments at prices that are too high, to sell certain other investments at prices that are too low, or to miss favorable opportunities altogether. Similarly, any hedging based on faulty Models and Data may prove to be unsuccessful.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather - related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC is the investment adviser to the fund. EquBot LLC serves as the sub-advisor to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with EquBot LLC.
AI Powered Equity ETF
As of September 30, 2022 (Unaudited)
AI Powered Equity ETF |
||||
As a percent of Net Assets: | ||||
Bermuda | 0.7 | % | ||
Canada | 3.2 | |||
Cayman Islands | 1.1 | |||
Ireland | 0.5 | |||
Marshall Islands | 0.1 | |||
Netherlands | 2.2 | |||
United States | 89.8 | |||
Short-Term and other Net Assets (Liabilities) | 2.4 | |||
100.0 | % |
AI Powered Equity ETF
September 30, 2022
Shares | Value | |||||||
COMMON STOCKS - 97.6% | ||||||||
Bermuda - 0.7% | ||||||||
Capital Markets - 0.1% | ||||||||
Lazard, Ltd. - Class A | 3,616 | $ | 115,097 | |||||
Hotels, Restaurants & Leisure - 0.6% | ||||||||
Norwegian Cruise Line Holdings, Ltd. (a)(b) | 48,210 | 547,666 | ||||||
Total Bermuda | 662,763 | |||||||
Canada - 3.2% | ||||||||
Metals & Mining - 0.9% | ||||||||
B2Gold Corp. | 279,826 | 901,041 | ||||||
Pharmaceuticals - 1.2% | ||||||||
Aurora Cannabis, Inc. (a)(b) | 179,161 | 218,576 | ||||||
Bausch Health Cos., Inc. (a)(b) | 147,789 | 1,018,267 | ||||||
Total Pharmaceuticals | 1,236,843 | |||||||
Professional Services - 0.1% | ||||||||
Stantec, Inc. | 2,880 | 126,230 | ||||||
Software - 1.0% | ||||||||
BlackBerry, Ltd. (a) | 205,664 | 966,621 | ||||||
Total Canada | 3,230,735 | |||||||
Cayman Islands - 1.1% | ||||||||
Semiconductors & Semiconductor Equipment - 1.1% | ||||||||
Ambarella, Inc. - ADR (a) | 19,038 | 1,069,555 | ||||||
Ireland - 0.5% | ||||||||
Pharmaceuticals - 0.5% | ||||||||
Perrigo Co. PLC | 13,088 | 466,718 | ||||||
Marshall Islands - 0.1% | ||||||||
Marine - 0.1% | ||||||||
Eagle Bulk Shipping, Inc. (b) | 3,163 | 136,578 | ||||||
Netherlands - 2.2% | ||||||||
Biotechnology - 0.3% | ||||||||
uniQure NV (a) | 14,120 | 264,891 | ||||||
Semiconductors & Semiconductor Equipment - 1.9% | ||||||||
NXP Semiconductors NV | 13,018 | 1,920,284 | ||||||
Total Netherlands | 2,185,175 | |||||||
United States - 89.8% | ||||||||
Aerospace & Defense - 2.3% | ||||||||
Lockheed Martin Corp. | 3,338 | 1,289,436 | ||||||
Spirit AeroSystems Holdings, Inc. - Class A | 43,965 | 963,713 | ||||||
Total Aerospace & Defense | 2,253,149 |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Airlines - 1.7% | ||||||||
Alaska Air Group, Inc. (a) | 14,337 | $ | 561,294 | |||||
Delta Air Lines, Inc. (a) | 4,134 | 116,000 | ||||||
Spirit Airlines, Inc. (a) | 21,393 | 402,616 | ||||||
United Airlines Holdings, Inc. (a) | 19,636 | 638,759 | ||||||
Total Airlines | 1,718,669 | |||||||
Auto Components - 0.2% | ||||||||
Goodyear Tire & Rubber Co. (a) | 21,961 | 221,586 | ||||||
Automobiles - 1.4% | ||||||||
Canoo, Inc. (a)(b) | 175,895 | 329,803 | ||||||
Ford Motor Co. | 28,227 | 316,142 | ||||||
Harley-Davidson, Inc. | 21,020 | 733,178 | ||||||
Total Automobiles | 1,379,123 | |||||||
Banks - 0.6% | ||||||||
Ameris Bancorp | 7,659 | 342,433 | ||||||
Wells Fargo & Co. | 7,457 | 299,921 | ||||||
Total Banks | 642,354 | |||||||
Biotechnology - 9.2% | ||||||||
Cerevel Therapeutics Holdings, Inc. (a) | 11,922 | 336,916 | ||||||
Halozyme Therapeutics, Inc. (a)(b) | 42,106 | 1,664,871 | ||||||
Moderna, Inc. (a) | 31,597 | 3,736,346 | ||||||
Novavax, Inc. (a)(b) | 104,168 | 1,895,858 | ||||||
Vertex Pharmaceuticals, Inc. (a) | 2,945 | 852,695 | ||||||
Vir Biotechnology, Inc. (a)(b) | 34,935 | 673,547 | ||||||
Total Biotechnology | 9,160,233 | |||||||
Building Products - 2.4% | ||||||||
AZEK Co., Inc. (a) | 35,563 | 591,057 | ||||||
Builders FirstSource, Inc. (a) | 29,938 | 1,763,947 | ||||||
Total Building Products | 2,355,004 | |||||||
Capital Markets - 1.8% | ||||||||
Blackstone, Inc. (b) | 11,949 | 1,000,131 | ||||||
The Goldman Sachs Group, Inc. | 2,675 | 783,909 | ||||||
Total Capital Markets | 1,784,040 | |||||||
Chemicals - 2.9% | ||||||||
Celanese Corp. | 4,871 | 440,046 | ||||||
Mosaic Co. | 50,108 | 2,421,719 | ||||||
Total Chemicals | 2,861,765 | |||||||
Communications Equipment - 0.5% | ||||||||
Cisco Systems, Inc. | 12,261 | 490,440 | ||||||
Construction & Engineering - 0.6% | ||||||||
Fluor Corp. (a)(b) | 21,943 | 546,161 | ||||||
Consumer Finance - 2.4% | ||||||||
American Express Co. | 17,631 | 2,378,598 | ||||||
Containers & Packaging - 0.4% | ||||||||
O-I Glass, Inc. (a)(b) | 29,741 | 385,146 | ||||||
Diversified Consumer Services - 1.0% | ||||||||
2U, Inc. (a) | 46,433 | 290,206 | ||||||
H&R Block, Inc. (b) | 16,808 | 715,013 | ||||||
Total Diversified Consumer Services | 1,005,219 |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Diversified Financial Services - 0.1% | ||||||||
A-Mark Precious Metals, Inc. | 4,178 | $ | 118,613 | |||||
Electrical Equipment - 2.5% | ||||||||
Array Technologies, Inc. (a)(b) | 70,930 | 1,176,020 | ||||||
Bloom Energy Corp. - Class A (a)(b) | 55,887 | 1,117,181 | ||||||
Sunrun, Inc. (a) | 7,951 | 219,368 | ||||||
Total Electrical Equipment | 2,512,569 | |||||||
Entertainment - 1.4% | ||||||||
AMC Entertainment Holdings, Inc. (a) | 204,343 | 1,424,271 | ||||||
Food & Staples Retailing - 0.7% | ||||||||
US Foods Holding Corp. (a) | 24,682 | 652,592 | ||||||
Food Products - 0.8% | ||||||||
Lamb Weston Holdings, Inc. | 4,917 | 380,477 | ||||||
The Simply Good Foods Co. (a) | 14,228 | 455,154 | ||||||
Total Food Products | 835,631 | |||||||
Health Care Equipment & Supplies - 3.9% | ||||||||
DexCom, Inc. (a) | 1,583 | 127,495 | ||||||
IDEXX Laboratories, Inc. (a) | 1,820 | 592,956 | ||||||
iRhythm Technologies, Inc. (a) | 7,920 | 992,218 | ||||||
Lantheus Holdings, Inc. (a) | 30,918 | 2,174,462 | ||||||
Total Health Care Equipment & Supplies | 3,887,131 | |||||||
Health Care Providers & Services - 0.7% | ||||||||
Clover Health Investments Corp. (a) | 208,528 | 354,497 | ||||||
Tenet Healthcare Corp. (a) | 6,594 | 340,119 | ||||||
Total Health Care Providers & Services | 694,616 | |||||||
Health Care Technology - 0.8% | ||||||||
Schrodinger, Inc. (a) | 30,530 | 762,639 | ||||||
Hotels, Restaurants & Leisure - 1.7% | ||||||||
Bally’s Corp. (a)(b) | 16,361 | 323,293 | ||||||
SeaWorld Entertainment, Inc. (a) | 17,176 | 781,680 | ||||||
Travel + Leisure Co. | 17,379 | 592,971 | ||||||
Total Hotels, Restaurants & Leisure | 1,697,944 | |||||||
Independent Power and Renewable Electricity Producers - 3.8% | ||||||||
Sunnova Energy International, Inc. (a)(b) | 172,264 | 3,803,589 | ||||||
Insurance - 0.9% | ||||||||
American International Group, Inc. | 9,650 | 458,182 | ||||||
Reinsurance Group of America, Inc. | 3,239 | 407,499 | ||||||
Total Insurance | 865,681 | |||||||
Interactive Media & Services - 2.4% | ||||||||
Bumble, Inc. - Class A (a)(b) | 85,654 | 1,840,704 | ||||||
fuboTV, Inc. (a)(b) | 132,715 | 471,138 | ||||||
Total Interactive Media & Services | 2,311,842 | |||||||
Internet & Direct Marketing Retail - 0.2% | ||||||||
Overstock.com, Inc. (a)(b) | 6,533 | 159,079 |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
IT Services - 2.1% | ||||||||
BigCommerce Holdings, Inc. (a) | 16,302 | $ | 241,270 | |||||
Cognizant Technology Solutions Corp. - Class A | 11,669 | 670,268 | ||||||
FleetCor Technologies, Inc. (a) | 3,172 | 558,811 | ||||||
Visa, Inc. - Class A (b) | 1,134 | 201,455 | ||||||
WEX, Inc. (a) | 3,496 | 443,782 | ||||||
Total IT Services | 2,115,586 | |||||||
Life Sciences Tools & Services - 0.5% | ||||||||
Maravai LifeSciences Holdings, Inc. (a) | 19,393 | 495,103 | ||||||
Machinery - 0.4% | ||||||||
Deere & Co. (b) | 1,101 | 367,613 | ||||||
Marine - 0.3% | ||||||||
Matson, Inc. | 4,384 | 269,704 | ||||||
Metals & Mining - 1.0% | ||||||||
Coeur Mining, Inc. (a) | 106,389 | 363,850 | ||||||
Steel Dynamics, Inc. (b) | 2,031 | 144,099 | ||||||
Warrior Met Coal, Inc. | 17,025 | 484,191 | ||||||
Total Metals & Mining | 992,140 | |||||||
Multiline Retail - 0.7% | ||||||||
Nordstrom, Inc. (b) | 41,048 | 686,733 | ||||||
Oil, Gas & Consumable Fuels - 16.7% | ||||||||
Antero Resources Corp. (a) | 160,830 | 4,910,140 | ||||||
APA Corp. | 6,210 | 212,320 | ||||||
Brigham Minerals, Inc. | 6,586 | 162,477 | ||||||
CONSOL Energy, Inc. | 1,859 | 119,571 | ||||||
Continental Resources, Inc. | 3,829 | 255,815 | ||||||
Coterra Energy, Inc. | 21,494 | 561,423 | ||||||
Devon Energy Corp. (b) | 5,542 | 333,240 | ||||||
Earthstone Energy, Inc. - Class A (a)(b) | 28,290 | 348,533 | ||||||
EOG Resources, Inc. | 1,397 | 156,087 | ||||||
Gevo, Inc. (a)(b) | 198,998 | 453,715 | ||||||
HF Sinclair Corp. | 23,794 | 1,281,069 | ||||||
Marathon Oil Corp. | 22,948 | 518,166 | ||||||
Matador Resources Co. (b) | 21,984 | 1,075,457 | ||||||
Northern Oil and Gas, Inc. (b) | 31,280 | 857,385 | ||||||
Occidental Petroleum Corp. (b) | 5,964 | 366,488 | ||||||
Range Resources Corp. (b) | 64,029 | 1,617,373 | ||||||
Ranger Oil Corp. | 12,067 | 379,507 | ||||||
Southwestern Energy Co. (a) | 257,523 | 1,576,041 | ||||||
Valero Energy Corp. | 12,826 | 1,370,458 | ||||||
Total Oil, Gas & Consumable Fuels | 16,555,265 | |||||||
Personal Products - 0.5% | ||||||||
Coty, Inc. - Class A (a)(b) | 75,855 | 479,404 | ||||||
Pharmaceuticals - 1.2% | ||||||||
Cassava Sciences, Inc. (a)(b) | 13,571 | 567,539 | ||||||
Organon & Co. (b) | 5,460 | 127,764 | ||||||
Zoetis, Inc. | 3,092 | 458,513 | ||||||
Total Pharmaceuticals | 1,153,816 |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
Professional Services - 0.3% | ||||||||
Upwork, Inc. (a) | 17,692 | $ | 240,965 | |||||
Real Estate Investment Trusts (REITs) - 1.4% | ||||||||
Equinix, Inc. | 668 | 379,985 | ||||||
PotlatchDeltic Corp. | 8,598 | 352,862 | ||||||
Ryman Hospitality Properties, Inc. (b) | 8,864 | 652,302 | ||||||
Total Real Estate Investment Trusts (REITs) | 1,385,149 | |||||||
Road & Rail - 1.5% | ||||||||
Lyft, Inc. - Class A (a)(b) | 110,687 | 1,457,748 | ||||||
Semiconductors & Semiconductor Equipment - 1.8% | ||||||||
First Solar, Inc. (a)(b) | 2,828 | 374,060 | ||||||
KLA Corp. | 604 | 182,789 | ||||||
Microchip Technology, Inc. | 15,993 | 976,053 | ||||||
QUALCOMM, Inc. | 2,511 | 283,693 | ||||||
Total Semiconductors & Semiconductor Equipment | 1,816,595 | |||||||
Software - 2.9% | ||||||||
Bentley Systems, Inc. - Class B | 18,107 | 553,893 | ||||||
Crowdstrike Holdings, Inc. - Class A (a) | 3,032 | 499,704 | ||||||
Fortinet, Inc. (a) | 2,172 | 106,710 | ||||||
Palantir Technologies, Inc. - Class A (a)(b) | 131,216 | 1,066,786 | ||||||
Tenable Holdings, Inc. (a) | 18,757 | 652,744 | ||||||
Total Software | 2,879,837 | |||||||
Specialty Retail - 8.5% | ||||||||
AutoNation, Inc. (a)(b) | 6,571 | 669,388 | ||||||
CarMax, Inc. (a)(b) | 4,151 | 274,049 | ||||||
Five Below, Inc. (a)(b) | 50,923 | 7,010,569 | ||||||
Group 1 Automotive, Inc. (b) | 965 | 137,870 | ||||||
The Home Depot, Inc. | 1,481 | 408,667 | ||||||
Total Specialty Retail | 8,500,543 | |||||||
Technology Hardware, Storage & Peripherals - 0.9% | ||||||||
Apple, Inc. | 6,287 | 868,863 | ||||||
Textiles, Apparel & Luxury Goods - 0.9% | ||||||||
Tapestry, Inc. | 22,134 | 629,269 | ||||||
Under Armour, Inc. - Class C (a) | 41,461 | 247,108 | ||||||
Total Textiles, Apparel & Luxury Goods | 876,377 | |||||||
Thrifts & Mortgage Finance - 0.4% | ||||||||
PennyMac Financial Services, Inc. | 8,475 | 363,578 | ||||||
Trading Companies & Distributors - 0.5% | ||||||||
United Rentals, Inc. (a) | 1,869 | 504,854 | ||||||
Total United States | 88,917,557 | |||||||
TOTAL COMMON STOCKS (Cost $108,956,095) | 96,669,081 |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2022 (Continued)
Shares | Value | |||||||
INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 27.8% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 3.18% (c) | 27,544,826 | $ | 27,544,826 | |||||
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $27,544,826) | 27,544,826 | |||||||
SHORT-TERM INVESTMENTS - 0.8% | ||||||||
Money Market Funds - 0.8% | ||||||||
First American Government Obligations Fund - Class X, 2.77% (c) | 786,697 | 786,697 | ||||||
TOTAL SHORT TERM INVESTMENTS (Cost $786,697) | 786,697 | |||||||
Total Investments (Cost $137,287,618) - 126.2% | 125,000,604 | |||||||
Liabilities in Excess of Other Assets - (26.2)% | (25,940,314 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 99,060,290 |
Percentages are stated as a percent of net assets.
PLC | Public Limited Company |
(a) | Non-income producing security. |
(b) | All or portion of this security was out on loan at September 30, 2022. |
(c) | The rate shown is the annualized seven-day yield at period end. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2022
AI Powered Equity ETF |
||||
ASSETS | ||||
Investments in securities, at value* | $ | 125,000,604 | ||
Receivables: | ||||
Dividends and interest receivable | 55,020 | |||
Securities lending income receivable | 8,248 | |||
Receivable for investments sold | 12,405,085 | |||
Total Assets | 137,468,957 | |||
LIABILITIES | ||||
Collateral received for securities loaned (Note 7) | 27,544,826 | |||
Payables: | ||||
Payable for investments purchased | 10,796,250 | |||
Unitary fees payable | 67,591 | |||
Total Liabilities | 38,408,667 | |||
Net Assets | $ | 99,060,290 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in Capital | $ | 157,414,561 | ||
Total distributable earnings (accumulated losses) | (58,354,271 | ) | ||
Net Assets | $ | 99,060,290 | ||
*Identified Cost: | ||||
Investments in securities | $ | 137,287,618 | ||
Shares Outstanding^ | 3,425,000 | |||
Net Asset Value, Offering and Redemption Price per Share | $ | 28.92 |
^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
For the Year Ended September 30, 2022
AI Powered Equity ETF |
||||
INVESTMENT INCOME | ||||
Income: | ||||
Dividends from investments (net of foreign withholdings tax of $4,793) | $ | 1,244,401 | ||
Interest | 15,560 | |||
Securities lending income | 128,381 | |||
Total Investment Income | 1,388,342 | |||
Expenses: | ||||
Unitary fees | 1,050,557 | |||
Total Expenses | 1,050,557 | |||
Net Investment Income | 337,785 | |||
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
Net Realized Gain (Loss) on: | ||||
Investments | (45,737,170 | ) | ||
In-Kind Redemptions | 17,759,210 | |||
Net Realized Loss on Investments and In-Kind Redemptions | (27,977,960 | ) | ||
Net Change in Unrealized Appreciation/Depreciation of: | ||||
Investments | (14,563,258 | ) | ||
Net Change in Unrealized Appreciation/Depreciation of Investments | (14,563,258 | ) | ||
Net Realized and Unrealized Loss on Investments | (42,541,218 | ) | ||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (42,203,433 | ) |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||
OPERATIONS | ||||||||
Net investment income (loss) | $ | 337,785 | $ | (149,583 | ) | |||
Net realized gain (loss) on investments and in-kind redemptions | (27,977,960 | ) | 47,269,564 | |||||
Net change in unrealized appreciation/depreciation of investments | (14,563,258 | ) | (13,078,850 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (42,203,433 | ) | 34,041,131 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions from distributable earnings | (2,903,688 | ) | (145,000 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares | (23,394,942 | ) | 40,773,047 | |||||
Net increase (decrease) in net assets | (68,502,063 | ) | 74,629,178 | |||||
NET ASSETS | ||||||||
Beginning of Year | 167,562,353 | 92,933,175 | ||||||
End of Year | $ | 99,060,290 | $ | 167,562,353 |
Summary of share transactions is as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||
Shares Sold | 4,550,000 | $ | 187,547,448 | 7,000,000 | $ | 282,430,807 | |||||||||||
Shares Redeemed | (5,200,000 | ) | (210,942,390 | ) | (5,950,000 | ) | (241,697,760 | ) | |||||||||
Net Transactions in Fund Shares | (650,000 | ) | $ | (23,394,942 | ) | 1,050,000 | $ | 40,733,047 | |||||||||
Beginning Shares | 4,075,000 | 3,025,000 | |||||||||||||||
Ending Shares | 3,425,000 | 4,075,000 |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
For a capital share outstanding throughout the year/period
Year Ended September 30, 2022 | Year Ended September 30, 2021 | Year Ended September 30, 2020 | Year Ended September 30, 2019 | Period Ended September 30, 20181 | ||||||||||||||||
Net Asset Value, Beginning of Year/Period | $ | 41.12 | $ | 30.72 | $ | 26.19 | $ | 29.50 | $ | 25.00 | ||||||||||
Income from Investment Operations: | ||||||||||||||||||||
Net investment income (loss) 2 | 0.09 | (0.03 | ) | 0.14 | 0.16 | 0.14 | ||||||||||||||
Net realized and unrealized gain (loss) on Investments | (11.57 | ) | 10.47 | 4.52 | (1.41 | ) | 4.49 | |||||||||||||
Total from investment operations | (11.48 | ) | 10.44 | 4.66 | (1.25 | ) | 4.63 | |||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | — | (0.04 | ) | (0.13 | ) | (0.17 | ) | (0.12 | ) | |||||||||||
Net realized gains | (0.72 | ) | — | — | (1.89 | ) | (0.01 | ) | ||||||||||||
Total distributions | (0.72 | ) | (0.04 | ) | (0.13 | ) | (2.06 | ) | (0.13 | ) | ||||||||||
Net asset value, end of year/period | $ | 28.92 | $ | 41.12 | $ | 30.72 | $ | 26.19 | $ | 29.50 | ||||||||||
Total Return | (28.45 | )% | 34.00 | % | 17.94 | % | (2.32 | )% | 18.53 | %3 | ||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net Assets at end of year/period (000’s) | $ | 99,060 | $ | 167,562 | $ | 92,933 | $ | 114,573 | $ | 206,472 | ||||||||||
Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | %4 | ||||||||||
Net Investment Income (Loss) to Average Net Assets | 0.24 | % | (0.09 | )% | 0.49 | % | 0.64 | % | 0.52 | %4 | ||||||||||
Portfolio Turnover Rate | 1708 | % | 540 | % | 239 | % | 129 | % | 260 | %3 |
1 | Commencement of operations on October 17, 2017. |
2 | Calculated based on average shares outstanding during the year/period. |
3 | Not annualized. |
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
September 30, 2022
NOTE 1 - ORGANIZATION
The AI Powered Equity ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The investment objective of the Fund is capital appreciation. The Fund commenced operations on October 17, 2017.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 25,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participant”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and are subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services — Investment Companies.
The Fund may invest in certain other investment companies (underlying funds). For more information about the underlying Fund’s operations and policies, please refer to those fund’s semiannual and annual reports, which are filed with the SEC.
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by ETF Managers Group, LLC (the “Adviser”), using procedures adopted by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2022, the Fund did not hold any securities fair valued by the Adviser.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
The following table presents a summary of the Fund’s investments in securities, at fair value, as of September 30, 2022:
AI Powered Equity ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 96,669,081 | $ | — | $ | — | $ | 96,669,081 | ||||||||
Short-Term Investments | 786,697 | — | — | 786,697 | ||||||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 27,544,826 | ||||||||||||
Total Investments in Securities | $ | 97,455,778 | $ | — | $ | — | $ | 125,000,604 |
^ For further information regarding security characteristics, see the Schedule of Investments.
* Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments.
B. | Federal Income Taxes. The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Fund’s 2022 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however, the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
As of September 30, 2022, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for state purposes, generally a range of three to four years from the date of filing), as applicable to the Fund, and has determined that no provision for income tax is required in the Fund’s financial statements.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries. |
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
D. | Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income are declared and paid for the Fund on a quarterly basis. Net realized gains on securities for the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
G. | Share Valuation. The NAV per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 - RISK FACTORS
Investing in the AI Powered Equity ETF may involve certain risks, as discussed in the Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Equity Market Risk. The equity securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors that affect securities markets generally or factors affecting specific issuers, industries, or sectors in which the Fund invests such as political, market and economic developments, as well as events that impact specific issuers.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Management Risk. The Fund is subject to management risk as an actively-managed investment portfolio. The Adviser’s investment approach may fail to produce the intended results. If the Adviser’s implementation of the EquBot Model is inaccurate or incomplete, the Fund may not perform as expected and your investment could lose value over short or long-term periods. Additionally, the Adviser has not previously managed a Fund whose strategy relies on the use of AI, which may create additional risks for the Fund.
Market Trading Risk. An investment in the Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses from trading in secondary markets, periods of high volatility and disruption in the creation/redemption process of the Fund. Any of these factors, among others, may lead to the Fund’s shares trading at a premium or discount to NAV.
Models and Data Risk. The Fund relies heavily on proprietary quantitative models as well as information and data supplied by third parties (“Models and Data”). When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks.
Portfolio Turnover Risk. The portfolio managers may actively and frequently trade securities or other instruments in the Fund’s portfolio to carry out its investment strategies. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.
Real Estate Investment Trust (“REIT”) Investment Risk. Investments in REITs involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume, and may be more volatile than other securities. REITs may be affected by changes in the value of their underlying properties or mortgages or by defaults by their borrowers or tenants. Furthermore, these entities depend upon specialized management skills, have limited diversification and are, therefore, subject to risks inherent in financing a limited number of projects. In addition, the performance of a REIT may be affected by changes in the tax laws or by its failure to qualify for tax-free pass-through of income.
Sector Risk. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.
Smaller Companies Risk. Smaller companies in which the Fund may invest may be more vulnerable to adverse business or economic events than larger, more established companies, and may underperform other segments of the market or the equity market as a whole. The securities of smaller companies also tend to be bought and sold less frequently and at significantly lower trading volumes than the securities of larger companies. As a result, it may be more difficult for the Fund to buy or sell a significant amount of the securities of a smaller company without an adverse impact on the price of the company’s securities, or the Fund may have to sell such securities in smaller quantities over a longer period of time, which may increase the Fund’s tracking error.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Fund and its investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under these circumstances, the Fund may have difficulty achieving its investment objective which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Fund’s third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Fund to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on the Fund’s performance, resulting in losses to the Fund.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Fund.
A complete description of the principal risks is included in the Fund’s prospectus under the heading “Principal Investment Risks.”
NOTE 4 - MANAGEMENT AND OTHER CONTRACTS
The Adviser serves as the investment Adviser to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Adviser, the Adviser provides investment advice to the Fund and oversees the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust.
Under the Investment Advisory Agreement with the Fund, the Adviser has overall responsibility for the general management and administration of the Fund and arranges for sub-Advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Adviser bears the costs of all Advisory and non-Advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Adviser at an annual rate of 0.75% of the Fund’s average daily net assets. The Adviser has an agreement with, and is dependent on, a third party to pay the Fund’s expenses in excess of 0.75% of the Fund’s average daily net assets. Additionally, under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Fund, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Adviser has entered into an Agreement with its affiliate, ETFMG Financial, LLC, to serve as distributor the Fund (the “Distributor”). The Distributor provides marketing support for the Fund, including distributing marketing materials related to the Fund.
EquBot, LLC serves as the sub-adviser to the Fund (the “Sub-Adviser”) and provides investment advice using the EquBot Model to the Adviser and the Fund. The Adviser is responsible for paying the entire amount of the Sub-Adviser’s fee for the Fund. The Sub-Adviser also provides marketing support for the Fund.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Fund. The Adviser compensates the Administrator for these services under an administration agreement between the two entities.
The Adviser pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Adviser for all reasonable out-of-pocket expenses incurred in connection with their duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 - DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of the Fund’s daily average net assets. For the year ended September 30, 2022, the Fund did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the year ended September 30, 2022:
Purchases | Sales | |||||||
AI Powered Equity ETF | $ | 2,320,112,704 | $ | 2,323,584,346 |
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the year ended September 30, 2022:
Purchases In- Kind |
Sales In- Kind |
|||||||
AI Powered Equity ETF | $ | 182,601,868 | $ | 206,186,126 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Fund’s taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations for the year ended September 30, 2022.
NOTE 7 — SECURITIES LENDING
The Fund may lend up to 33 1/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations either directly on behalf of the Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Adviser; however, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies, in which the Fund may invest cash collateral, can be expected to incur fees and expenses for operations, such as investment Advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Adviser. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
As of September 30, 2022, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
Fund | Values of Securities on Loan |
Fund Collateral Received* |
||||||
AI Powered Equity ETF | $ | 26,561,070 | $ | 27,544,826 |
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, LLC, an investment with an overnight and continuous maturity, as shown on the Schedule of Investments.
NOTE 8 - FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2022, were as follows:
Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
AI Powered Equity ETF | $ | 139,681,683 | $ | 425,239 | $ | (15,106,318 | ) | $ | (14,681,079 | ) |
Undistributed Ordinary Income | Undistributed Long-Term Gain |
Total Distributable Earnings |
Other Accumulated (Loss) |
Total Accumulated Gain |
||||||||||||||||
AI Powered Equity ETF | $ | 105,914 | $ | — | $ | 105,914 | $ | (43,779,106 | ) | $ | (58,354,271 | ) |
As of September 30, 2022, the Fund had accumulated capital loss carryovers of:
Capital Loss Carryover ST |
Capital Loss Carryover LT |
Expires | |||||||
AI Powered Equity ETF | $ | (43,783,881 | ) | None | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The Fund had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2022.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Continued)
Later Year Ordinary Loss |
Post-October Loss | |||
AI Powered Equity ETF | None | None |
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2022, the following table shows the reclassifications made:
Total Distributable Earnings/(Loss) |
Paid-In Capital |
|||||||
AI Powered Equity ETF | $ | (16,040,303 | ) | $ | 16,040,303 |
The tax character of distributions paid by the Fund during the fiscal years ended September 30, 2022 and September 30, 2021 are as follows:
Year Ended September 30, 2022 |
Year Ended September 30, 2021 |
|||||||||||||||
From Ordinary Income |
From Capital Gains |
From Ordinary Income |
From Capital Gains |
|||||||||||||
AI Powered Equity ETF | $ | — | $ | 2,903,688 | $ | 145,000 | $ | — |
NOTE 9 - LEGAL MATTERS
The Trust, the Adviser, and certain officers and affiliated persons of the Adviser (together with the Adviser, the “Adviser Defendants”) were named as defendants in an action filed December 21, 2021, in the Superior Court of New Jersey, Union County, captioned PureShares, LLC, d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. UNN-C-152-21 (the “NJ Action”). The NJ Action asserted breach of contract and other tort claims and sought damages in unspecified amounts and injunctive relief. On May 25, 2022, the court in the NJ Action dismissed with prejudice all claims asserted against the Trust, as well as all contract claims and all except one tort claim asserted against the Adviser Defendants.
As of September 30, 2022, there were no adjustments made to the accompanying financial statements based on the above legal matters.
NOTE 10 - SUBSEQUENT EVENTS
In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.
AI Powered Equity ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of AI Powered Equity ETF:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of AI Powered Equity ETF (the “Fund”) (a series of ETF Managers Trust) as of September 30, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the periods indicated therein, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of September 30, 2022, and the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor of one or more series of the Trust since 2013.
New York, New York
November 29, 2022
AI Powered Equity ETF
Six Months Ended September 30, 2022 (Unaudited)
As a shareholder of AI Powered Equity ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (April 1, 2022 to September 30, 2022).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
AI Powered Equity ETF | Beginning Account Value April 1, 2022 |
Ending Account Value September 30, 2022 |
Expenses Paid, During the Period ^ |
Annualized Expense Ratio During the Period April 1, 2022 to September 30, 2022 |
||||||||||||
Actual | $ | 1,000.00 | $ | 785.80 | $ | 3.36 | 0.75 | % | ||||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.31 | $ | 3.80 | 0.75 | % |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/365 (to reflect the one-half year period).
AI Powered Equity ETF
September 30, 2022 (Unaudited)
NOTE 1 - FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of the Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 - FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2022, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Fund Name | Qualified Dividend Income |
AI Powered Equity ETF | 0.00% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2022 was as follows:
Fund Name | Dividends Received Deduction |
AI Powered Equity ETF | 0.00% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for the Fund were as follows:
Fund Name | Short-Term Capital Gain |
AI Powered Equity ETF | 0.00% |
NOTE 3 - INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund files a complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters on Part F of Form N-PORT. Once filed, the Fund’s Part F of Form N-PORT is available, without charge, upon request on the SEC’s website (www.sec.gov), the Fund’s website (www.etfmgfunds.com) and is available by calling (877) 756-7873. The Fund’s portfolio holdings are posted on its website at www.etfmgfunds.com daily.
NOTE 4 - INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.etfmgfunds.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
AI Powered Equity ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
AI Powered Equity ETF
Board of Trustees (Continued)
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
Terry Loebs (1963) |
Trustee (since 2014); Lead Independent Trustee (since 2020) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 17 | None |
Eric
Wiegel (1960) |
Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018). | 17 | None |
AI Powered Equity ETF
ETF MANAGERS TRUST
Privacy Policy and Procedures
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S. Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
(b)
|
Not applicable.
|
FYE 9/30/2022
|
FYE 9/30/2021
|
|
Audit Fees
|
$368,200
|
$351,200
|
Audit-Related Fees
|
N/A
|
N/A
|
Tax Fees
|
$83,050
|
$60,400
|
All Other Fees
|
N/A
|
N/A
|
FYE 9/30/2022
|
FYE 9/30/2021
|
|
Audit-Related Fees
|
0%
|
0%
|
Tax Fees
|
0%
|
0%
|
All Other Fees
|
0%
|
0%
|
Non-Audit Related Fees
|
FYE 9/30/2022
|
FYE 9/30/2021
|
Registrant
|
N/A
|
N/A
|
Registrant’s Investment Adviser
|
N/A
|
N/A
|
(a)
|
The registrant is an issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934, (the “Act”) and has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Act. The
independent members of the committee, consisting solely of independent trustees, are Mr. Eric Weigel and Mr. Terry Loebs.
|
(b)
|
Not Applicable.
|
a)
|
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
|
b)
|
Not Applicable.
|
(a)
|
The Registrant’s Principal Executive Officer and Principal Financial Officer/Treasurer have reviewed the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”))
as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the
disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and
by the Registrant’s service provider.
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(b)
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There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
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(a)
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(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an
exhibit. Filed herewith.
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(b)
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Certifications pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002. Furnished herewith.
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EXCHANGE TRADED MANAGERS GROUP LLC
CODE OF ETHICS
This Code of Ethics (“Code”) has been adopted by Exchange Traded Managers Group LLC (the “Parent”) and its affiliates, ETF Managers Group LLC (the “Adviser”), ETFMG Financial LLC (the “Distributor”), and ETF Managers Trust (“Trust”). The Parent and each of its affiliates are collectively referred to herein as “ETFMG” and each, as context dictates, may be referred to herein as “ETFMG.” While affirming its confidence in the integrity and good faith of all of its officers and trustees, ETFMG recognizes that the knowledge of present or future portfolio transactions and, in certain instances, the power to influence portfolio transactions which may be possessed by certain of officers, employees and trustees could place such individuals, if they engage in personal transactions in securities which are eligible for investment by ETFMG, in a position where their personal interest may conflict with that of ETFMG.
This Code is designed to comply with Rule 204A-1 under the Investment Advisers Act of 1940 (“Advisers Act”) and the provisions of Rule 17j-1(b)(1) under the Investment Company Act of 1940, as amended (the “1940 Act”). ETFMG has determined to adopt this Code to set forth standards of conduct and require supervised persons to comply with applicable federal securities laws. The purpose of the Code is to establish standards that promote honest and ethical conduct, full, fair, accurate and timely disclosure with regulatory authorities, compliance with all applicable governmental laws, rules and regulations, prompt internal reporting of violations of the Code and accountability for adherence to the Code. The Code prohibits certain types of transactions deemed to create conflicts of interest (or at least the potential for or the appearance of such a conflict), and to establish reporting requirements and enforcement procedures.
I. Statement of General Principles.
In recognition of the trust and confidence placed in ETFMG by its shareholders, and to give effect to the ETFMG’s belief that its operations should be directed to the benefit of its shareholders, ETFMG hereby adopts the following general principles of this Code to guide the actions of its trustees, officers and employees:
(1) | The interests of ETFMG’s shareholders are paramount, and all of ETFMG’s personnel must conduct themselves and their operations to give maximum effect to this tenet by assiduously placing the interests of the shareholders before their own. |
(2) | All personal transactions in securities by ETFMG’s personnel must be accomplished so as to avoid even the appearance of a conflict of interest on the part of such personnel with the interests of ETFMG and its shareholders. |
(3) | All of ETFMG’s personnel must avoid actions or activities that allow (or appear to allow) a person to profit or benefit from his or her position with respect to ETFMG, or that otherwise bring into question the person’s independence or judgment. |
II. Definitions.
(1) | “Access Person” shall mean (i) each director/trustee, officer, partner, employee or registered representative of ETFMG or any of ETFMG’s advisers (or of any company in a Control relationship to ETFMG), (ii) certain contractors (including investment sub-advisers) of ETFMG, as determined and notified by ETFMG’s Chief Compliance Officer (“CCO”), (iii) any other person, as determined and notified by the CCO, who, in connection with his or her regular functions or duties, makes, participates in, or obtains non-public information regarding, the purchase or sale of a Security by ETFMG, its affiliates or any series thereof (each a “Fund”), or (iv) such other persons designated under this Code. |
(2) | An “actively managed Fund” is any Fund (as defined below) other than an index-based Fund. |
(3) | “Account” shall mean any accounts of any Access Person or a member of their immediate family (any relative by blood or marriage) living in the Access Person’s household, and any account (brokerage, investment, dividend reinvestment programs, mutual fund, 529 Plan, 401(k) or other retirement accounts, employee stock purchase program or employee stock options programs) in which he or she has a direct or indirect beneficial interest or exercises investment discretion. An “Account” does not include accounts held directly with mutual fund companies. |
(4) | “Beneficial Ownership” of a security is to be determined in the same manner as it is for purposes of Section 16 of the Securities Exchange Act of 1934. This means that a person should generally consider himself the beneficial owner of any securities in which he has a direct or indirect pecuniary interest. In addition, a person should consider himself the beneficial owner of securities held by his spouse, his minor children, a relative who shares his home, or other persons by reason of any contract, arrangement, understanding or relationship that provides him with sole or shared voting or investment power. |
(5) | “Control” shall have the same meaning as that set forth in Section 2(a)(9) of the 1940 Act. Section 2(a)(9) provides that “control” means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. Ownership of 25% or more of a company’s outstanding voting security is presumed to give the holder thereof control over the company. Such presumption may be countered by the facts and circumstances of a given situation. |
(6) | “Covered Person” shall include all Access persons who (i) make or participate in the making of investments and/or potential investments for Funds; (ii) have access to non-public information on investments and/or potential investments for Funds; or (iii) have access to non-public information regarding securities recommendations to clients. |
(7) | “Independent Trustee” means a Trustee of the ETF Managers Trust who is not an “interested person” of the Trust within the meaning of Section 2(a)(19) of the 1940 Act. |
(8) | An “index-based Fund” is a Fund (as defined below) that seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of a specified index. |
(9) | “Initial Public Offering” (“IPO”) means an offering of Securities registered under the Securities Act of 1933, the issuer of which, immediately before registration, was not subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934. |
(10) | “Private Placement” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) in the Securities Act of 1933. |
(11) | “Purchase or sale of a Security” includes, among other things, the writing of an option to purchase or sell a Security. |
(12) | “Restricted Security” means any Security (i) that is held or to be acquired by an actively managed Fund; (ii) that the Adviser is researching, analyzing or considering buying or selling for a Fund; or (iii) for which a Covered Person may have material non-public information. |
(13) | “Security” shall have the same meaning as that set forth in Section 2(a)(36) of the 1940 Act and shall include, but is not limited to: any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any Security (including a certificate of deposit) or on any group or index of Securities, or any put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency, any exchange traded vehicle (including, but not limited to, closed-end mutual funds, exchange traded notes and exchange traded funds). Further, for purpose of the Code, “Security” shall include any commodity contracts and derivatives. |
(14) | A Security “held or to be acquired” by ETFMG or any Fund means (A) any Security which (i) is or has been held by ETFMG or any Fund, or (ii) is being or has been considered by a Fund’s investment adviser or sub-adviser for purchase by the Fund; (B) and any option to purchase or sell and any Security convertible into or exchangeable for any Security described in (A) above. |
(15) | A Security is “being purchased or sold” by ETFMG from the time when a purchase or sale program has been communicated to the person who places the buy and sell orders for ETFMG until the time when such program has been fully completed or terminated. |
III. Prohibited Purchases and Sales of Securities.
(1) | No Access Person shall, directly or indirectly: |
(A) | Purchase or sell any Security that ETFMG or its affiliates distribute or sponsor; |
(B) | Employ any device, scheme or artifice to defraud a Fund; |
(C) | Make to a Fund any untrue statement of a material fact or omit to state to a Fund a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading; |
(D) | Engage in any act, practice or course of business which would operate as a fraud or deceit upon a Fund; or |
(E) | Engage in any manipulative practice with respect to a Fund. |
(2) | No Access Person shall purchase or sell, directly or indirectly, any underlying Security contained in any index-based Fund(s) that ETFMG or its affiliates distribute or sponsor for a period beginning prior to trading in connection with a respective portfolio rebalance in any such Fund(s) and ending after settlement of trades performed in connection with the portfolio rebalance (the “Restrictive Period”). The CCO shall notify all Access Persons in writing of any Securities subject to the Restrictive Period (the “Restricted List”), specifying both the commencement date and duration of such Restrictive Period. |
(3) | No Covered Person shall purchase or sell, directly or indirectly, any Restricted Security, unless pre-approval is received from the CCO. |
(4) | The requirements contained in paragraphs III(1)(A), III(2) and III(3) above shall not apply to: |
a) | An Independent Trustee or a Member of the Board of Managers of Exchange Traded Managers Group LLC (the “Board of Managers”; |
b) | Purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control (i.e., a managed account in which the Access Person does not exercise discretion over the account); |
c) | Transactions effected pursuant to an automatic 401(k) Plan or automatic dividend reinvestment plan; |
d) | Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired; |
e) | Shares issued by open-end investment companies registered under the 1940 Act; and c |
f) | Parent company stock. |
IV. Additional Restrictions and Requirements.
(1) | Each Access Person is prohibited from acquiring, either directly or indirectly, Beneficial Ownership of any securities offered in connection with an IPO, in which ETFMG or its affiliates are either the distributor, sponsor or member of the selling group. |
(2) | Access Persons must obtain approval of the CCO before acquiring Beneficial Ownership in any other IPO or a Private Placement. |
(3) | No Access Person shall accept or receive any gift of more than de minimis1 value from any person or entity that does business with or on behalf of ETFMG. |
1 De minimis value is generally intended to mean gifts of less than $200 in value.
V. Reporting Obligations.
(1) | Each Access Person (with the exception of anyone named in Section III(4)(a)) must provide to the CCO, no later than ten days after he or she becomes an Access Person, an initial holdings report, and, within forty-five days after the end of each calendar year, an annual holdings report. The initial and annual holding reports shall disclose: |
(A) | The title and type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares and principal of amount of each Security in which such Access Person had any direct or indirect Beneficial Ownership; |
(B) | The name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person; and |
(C) | The date that the report was submitted by the Access Person. |
The information included in the initial holdings report must be current as of a date no more than 45 days prior to the date such person becomes an Access Person. The information included in the annual holdings report must be as of each calendar year-end. The Initial Holdings Report and Annual Holdings Report are attached as Exhibit I and Exhibit II, respectively.
(2) | Access Persons are not required to submit an initial or annual holdings report with respect to transactions effected for, and Securities held in, any account over which the Access Person has no direct or indirect influence or Control. |
(3) | Except as discussed below, each Access Person (with the exception of anyone named in Section III(4)(a)) shall provide to the CCO broker trade confirmations or account statements (“trading statements”), for each Account in which the Access Person has direct or indirect Control or Beneficial Ownership, for the most recent month. Such trading statements shall include the investment activities of family members. The CCO shall submit such transaction reports with respect to his or her own personal securities transactions to an officer designated to receive his or her reports, who shall act in all respects in the manner prescribed herein for the CCO. |
(4) | Every trading statement shall be provided on a monthly basis to the CCO not later than 30 days after the end of the month in which the transaction to which the trading statement relates was effected. The trading statements shall contain the following information: |
(A) | The name of the account holder and the account number; |
(B) | The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Security involved; |
(C) | The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition); |
(D) | The price of the Security at which the transaction was effected; |
(E) | The name of the broker, dealer or bank with or through whom the transaction was effected; |
(5) | Notwithstanding anything herein to the contrary, an Independent Trustee or a Member of the Board of Managers shall report transactions in Securities only if such person knew at the time of the transaction or, in the ordinary course of fulfilling his or her official duties as a trustee, should have known immediately preceding or following the date of the trustee’s transaction, such Security was purchased or sold, or was being considered for purchase or sale, by ETFMG. (The “should have known” standard implies no duty of inquiry, does not presume there should have been any deduction or extrapolation from discussions or memoranda dealing with tactics to be employed meeting a Fund’s investment objectives, or that any knowledge is to be imputed because of prior knowledge of the Fund’s portfolio holdings, market considerations, or the Fund’s investment policies, objectives and restrictions.) |
(6) | Each Independent Trustee or Member of the Board of Managers shall report the name of any publicly-owned company (or any company anticipating a public offering of its equity securities) and the total number of its shares beneficially owned by him or her if such total ownership is more than 1/2 of 1% of the company’s outstanding shares. Such report shall be made promptly after the date on which the Trustee’s ownership interest equaled or exceeded 1/2 of 1%. |
VI. Review and Enforcement.
(1) | The CCO is responsible for identifying each person who is (a) an Access Person of ETFMG; and (b) required to report his or her transactions under this Code and shall inform such Access Persons of their reporting obligation under the Code. Such Access Persons shall promptly upon such request or notification execute the Compliance Certification attached hereto as Exhibit III. |
(2) | The CCO shall compare all reported personal securities transactions with the Restricted List during each respective Restricted Period to determine whether a violation of this Code may have occurred. Before making any determination that a violation has been committed by any person, the CCO may give such person an opportunity to supply additional explanatory material. |
(3) | If the CCO determines that a violation of this Code may have occurred, he or she shall conduct an investigation of the alleged violation and submit a written determination upon conclusion together with supporting documentation to the Chief Executive Officer (“CEO”). |
(4) | If the CEO concludes that a violation has occurred, the CEO shall impose upon the individual such sanctions as he or she deems appropriate, including but not limited to dismissal, suspension, disgorgement of profits, cancellation of trades, selling of positions and suspension of personal trading privileges and shall report the violation and the sanction imposed to the Board of Trustees of ETFMG. |
(5) | No person shall participate in a determination of whether he has committed a violation of the Code or of the imposition of any sanction against himself. If a securities transaction of the CEO is under consideration, any other senior officer shall act in all respects in the manner prescribed herein for the CEO. |
VII. Investment Adviser’s or Administrator’s Code of Ethics.
Each investment adviser (including, where applicable, any sub-adviser), administrator or manager (where applicable), and principal underwriter of ETFMG shall:
(1) | Submit to the Board of Trustees of the Trust a copy of its code of ethics adopted pursuant to or in compliance with Rule 17j-1; |
(2) | Promptly report to ETFMG in writing any material amendments to such code of ethics; |
(3) | Promptly furnish to ETFMG, upon request, copies of any reports made pursuant to such code of ethics by any person who is an Access Person as to ETFMG; |
(4) | Shall immediately furnish to the Board, without request, all material information regarding any violation of such code of ethics by any person who is an Access Person; and |
(5) | At least once a year, provide the Board with a written report that describes any issue(s) that arose during the previous year under its code of ethics, including any material code violations and any resulting sanction(s), and a certification that it has adopted measures reasonably necessary to prevent its personnel from violating its code of ethics. |
VIII. Annual Written Report to the Board.
At least once a year, the CCO for ETFMG will provide the Board of Trustees a written report that includes:
(1) | Issues Arising Under the Code. The report will describe any issue(s) that arose during the previous year under the Code, including any material code violations, and any resulting sanction(s). |
(2) | Certification. The report will certify to the Board of Trustees that ETFMG has adopted measures reasonably necessary to prevent its personnel from violating the Code. |
IX. Records.
ETFMG shall maintain records in the manner and to the extent set forth below, which records may be maintained under the conditions described in Rule 31a-2 under the 1940 Act and shall be available for examination by representatives of the Securities and Exchange Commission.
(1) | A copy of this Code and any other code which is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place; |
(2) | A record of any violation of this Code and of any action taken as a result of such violation shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs; |
(3) | A copy of each report submitted by an Access Person who is required to report under this Code, including any information provided in lieu of any such reports, shall be preserved for a period of not less than five years from the end of the fiscal year in which it is made or the information is provided, the first two years in an easily accessible place; |
(4) | A list of all persons who are, or within the past five years have been, required to submit their reports pursuant to this Code, or who are or were responsible for reviewing these reports, shall be maintained in an easily accessible place; |
(5) | A copy of each annual report to the Board of Trustees will be maintained for at least five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place; and |
(6) | A record of any decision, and the reasons supporting the decision, to approve the acquisition of Securities in an IPO or a Private Placement, shall be preserved for at least five years after the end of the fiscal year in which the approval is granted. |
X. Miscellaneous.
(1) | Confidentiality. All reports of securities transactions and any other information filed with ETFMG pursuant to this Code shall be treated as confidential unless otherwise required by law or a court of appropriate jurisdiction. |
(2) | Interpretation of Provisions. The Board of Trustees may from time to time adopt such interpretations of this Code as it deems appropriate. |
(3) | Periodic Review and Reporting. The CEO shall report to the Board of Trustees at least annually as to the operation of this Code and shall address in any such report the need (if any) for further changes or modifications to this Code. |
EXHIBIT I
INITIAL HOLDINGS REPORT
Name of Reporting Person: | ||
Date Person Became Subject to the Code’s Reporting Requirements: | ||
Information in Report Dated as of: | ||
Date Report Submitted: |
Securities Holdings
Name of Issuer and Title of Security |
Type of Security and Ticker Symbol or CUSIP Number (if applicable) |
No. of Shares (if applicable) |
Principal Amount (if applicable) |
If you have no securities holdings to report, please check here. ☐
If you do not want this report to be construed as an admission that you have beneficial ownership of one or more securities reported above, please describe below and indicate which securities are at issue.
Securities Accounts
If you maintain an account in which any securities are held for your direct or indirect benefit, please provide the following information:
Name of Broker, Dealer or Bank | Name(s) on and Type of Account |
If you have no securities accounts to report, please check here. ☐
I certify that I have included on this report all securities holdings and accounts required to be reported pursuant to the Code of Ethics.
Signature | Date |
EXHIBIT II
ANNUAL HOLDINGS REPORT
Name of Reporting Person: | ||
Information in Report Dated as of: | ||
Date Report Submitted: | ||
Calendar Year Ended: | December 31, _______ |
Securities Holdings
Name of Issuer and Title of Security |
Type of Security and Ticker Symbol or CUSIP Number (if applicable) |
No. of Shares (if applicable) |
Principal Amount (if applicable) |
If you have no securities holdings to report, please check here. ☐
If you do not want this report to be construed as an admission that you have beneficial ownership of one or more securities reported above, please describe below and indicate which securities are at issue.
Securities Accounts
If you maintain an account in which any securities are held for your direct or indirect benefit, please provide the following information:
Name of Broker, Dealer or Bank | Name(s) on and Type of Account |
If you have no securities accounts to report, please check here. ☐
I certify that I have included on this report all securities holdings and accounts required to be reported pursuant to the Code of Ethics.
Signature | Date |
EXHIBIT III
COMPLIANCE CERTIFICATION
Initial Certification | |
I certify that I: | (i) have received, read and reviewed ETFMG’s Code of Ethics; |
(ii) understand the policies and procedures in the Code; | |
(iii) recognize that I am subject to such policies and procedures; | |
(iv) understand the penalties for non-compliance; | |
(v) will fully comply with ETFMG’s Code of Ethics; and | |
(vi) have fully and accurately completed this Certificate. |
Signature: | ||
Name: | ||
(Print Name) | ||
Date Submitted |
11
1.
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I have reviewed this report on Form N-CSR of the ETF Managers Trust;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
|
(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize, and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: 12/5/2022
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/s/ Samuel Masucci III
Samuel Masucci III
Principal Executive Officer, ETF Managers Trust |
1.
|
I have reviewed this report on Form N-CSR of the ETF Managers Trust;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
|
4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize, and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: 12/5/2022
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/s/ John Flanagan
John Flanagan
Principal Financial Officer/Treasurer, ETF Managers Trust |
/s/ Samuel Masucci III
Samuel Masucci III
Principal Executive Officer, ETF Managers Trust
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/s/ John Flanagan
John A. Flanagan
Principal Financial Officer/Treasurer, ETF Managers Trust
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Dated: 12/5/2022
|
Dated: 12/5/2022
|